AI Agent Hunter: How did Carrier Hotels get started and how have they evolved?
Hunter: Carrier Hotels were born out of necessity. The need was for competitive carriers to connect to the incumbent telephone network in a given city where that incumbent carrier owned the building where its switches were located. This reality was a function of the need for the incumbent to have a building to house its own equipment. This is logical. The issue was that once legal deregulation occurred there was a physical need for interconnection, but the only known real estate that existed for the purpose was that of the incumbent. The incumbents were the owner of the building as well as the network that was being forced to “open up” to competition, so obviously they had an unfair advantage in controlling access, space, power and interconnection within their own buildings. It is a wonder how this was not know prior to deregulation occurring “on paper”, but the physical aspect of interconnection being required to actually realize the intent of the legal obligation. The control the incumbents had over the real estate gave them a castle and moat to protect their network services business. The incumbent control over real estate forced the competitive networks to seek out alternatives. Since the competitive networks typically did not factor in the cost of constructing their own entire building in to their financial models just to house their switching equipment they had to find a cost effective solution.
An excellent, historical example of this is how, in 1984, AT&T would not allow MCI to take any space in its international long distance switch building, 32 6th Ave, in NYC for MCI to locate their own switching equipment. This forced MCI to find another way to interconnect to the newly deregulated ATT&T international long distance switches which carried international phone calls from the US. After studying the local streets to assess the distance and cost of trenching the roads and having to drill holes in the building for access, MCI found the old Western Union pneumatic duct system buried underground since 1930. The ducts connected 32 6th Ave to 60 Hudson St, the former world headquarters of Western Union, and they were empty. MCI negotiated for the right to access the empty ducts and were able to pull their telephone cable through those ducts to access the AT&T switches at a distance of about 7 bocks in Manhattan. This is how international long distance telephone calls were actually opened up for competition - physical access!
60 Husdon St became known as the building to go to in order to get access to the AT&T international switches. Over time many competitive carriers took space in 60 Hudson St. They each had their own routes and end points that they connected, so given their new found physical proximity they began to interconnect to each other within the walls and floors of 60 Hudson St.
In the beginning this was very disorganized. Many cables were run without any documentation, or even approval from the building. This became a problem on multiple levels. Cable mismanagement led to congestion in the riser shafts of the building and the lateral cables on floors were often just laid, unsecured, above the drop-ceiling in the hallways with no support. Hundreds of cables were run this way. No cable management meant no one knew whose cable was whose. Cables got cut, cables were lost. Many times points of entry in to different suites and rooms were built by one company on one day only to be taken by another company the very next day without any notice, or documentation. It was the Wild West. Although the genesis may have differed, the history of most Carrier Hotels is the same from the point of it being established as the place to go in a given city to get connected. The mismanagement gave rise to the need for a common, neutral room in the building where all of the networks in the building would extend a physical network interconnection presence in to so that they could get connected to the other networks with ease and predictability. Time to revenue and the cost of customer acquisiton became a critical factor, as it still is today.
Almost every major Carrier Hotel in the USA has now traded hands since their value has been discovered. I know because I have led many of those acquisitions. Those that remain are mostly in smaller markets and underdeveloped as a result. There remains opportunity, but it still requires know-how and setting proper expectations for returns. The need for organization and standardization is as great as it was 20 years ago though, if not more so today. This is a segue in to the “Digital Divide” conversation and the two primary paths for dealing with the elimination of places in the USA that are unserved by local, neutral interconnection facilities with an Internet Exchange present.
