Monday, June 19, 2017

Digital Realty pays a premium for DuPont Fabros

Late last week came news of the latest consolidation in the rapidly-evolving market of colocation data centres. Digital Realty agreed to acquire DuPont Fabros Technology (DFT) in an all-stock transaction valued at approximately $7.6 billion. DFT owns and operates a fleet of 12 purpose-built data centres concentrated in Northern Virginia, Chicago and Silicon Valley - three markets red hot for data centre activity. The DFT properties offer a combined total 3.5 million gross sq feet and 302 megawatts of available critical load. Digital Realty is the premier name in data centres, as it operates 156 key colocation facilities in 11 countries on four continents. The merger especially boosts Digital Realty's presence in hyperscale data centres in top U.S. markets.

DuPont Fabros hits a home run with hyperscale data centres

The quick summary for DFT is that all of the space in its 12 massive data centres is fully leased. The company is enjoying double digit growth in both revenue and earnings. A significant expansion programme is underway, including its first venture into Canada. The stock price has been soaring and now there is a takeover offer valued at $7.6 billion from the industry's leading player.

DFT was founded in 1997 and is based in Washington DC. Its co-founder and ongoing chairman of the board is Lammot J. du Pont and its second co-founder was Hossein Fateh. Together they pursued the concept of managing data centres as real estate, helping their enterprise customers to consolidate the rent, taxes and maintenance costs all under one lease. In 2007, the company went public as a real estate investment trust (REIT).

For the quarter ended March 31, 2017, earnings were 45c per share compared to 36c per share in the first quarter of 2016. Earnings increased 9c per share, or 25%, year over year, which was primarily due to new leases that commenced in 2016 and the first quarter of 2017 and lower preferred stock dividends, partially offset by the impact of the issuance of common stock that occurred late in the first quarter of 2016. For the year ended December 31, 2016, earnings were $1.67 per share compared to loss of 40c per share in 2015. The company proudly notes the credit worthiness of its leases, saying that investment grade or equivalent customers will represent more than 50% of total revenue.

DFT flagship location is its Ashburn, Virginia campus, which comprises of 2.138 million gross sq feet, built on 159.7 acres with a total critical load of 207.9 megawatts. Ashburn, commonly referred to as Data Center Alley, benefits from dense fibre connections to all major U.S. carriers, the presence of many federal agency customers and low-energy costs from Dominion Virginia Power. On this point, it should also be noted the Commonwealth of Virginia, along with Dominion Virginia Power (the leading electric utility in the state), have been laggards in regard to renewable energy. Dominion's website still lists coal generation as constituting 26.5% of its energy mix, while renewables (including hydro) account for only 5.6%. Another data centre in nearby Reston, Virginia adds another 256,000 sq feet of colocation capacity. For the central U.S., DFT owns and operates a campus in Elk Grove Village, Illinois (just outside Chicago) with a total 820,000 sq feet of space in two building. For the West Coast, DFT owns and operates a data centre in Santa Clara, California offering 360,000-sq feet of space and 36.6 megawatts of critical load capacity.

In 2016, DFT acquired the former Toronto Star printing plant in Vaughan, Ontario for $55 million CAD. Construction is underway to convert the former printing plant into a state-of-the-art data centre with 23 computer rooms spread across 21,016 M2 with a critical data power capacity of up to 46 MW.

As mentioned above, DFT also has a very busy expansion program under way.  It has six data centre development projects currently under construction in Ashburn, Chicago, Santa Clara and Toronto for a total expected investment of approximately $750 million. These new facilities represent roughly a 26% expansion of its standalone critical load capacity. All are expected to be online within the next 12 months, and remarkably the company has already pre-leased 48% of the new capacity. DuPont Fabros also boasts strategic land holdings in Ashburn and Oregon, which will support the future delivery of up to 163 megawatts of incremental capacity, along with 56 acres of land recently acquired in Phoenix.

In May, DFT confirmed its largest wholesale lease to date. A customer pre-leased 28.8 megawatts of electrical loads across two markets: its new CH2 data centre in Elk Grove Village and the first two phases of a new building being constructed on its Ashburn campus. In short, DFT is firing on all cylinders. The company has been the enviable position of signing customers even faster than it can build its hyperscale data centres. No wonder Digital Realty was willing to pay $7.6 billion to acquire them.

DLR gets interconnected metro data centre campuses

With 156 data centres to its name, Digital Realty (DLR) was already a competitive provider in all the DFT markets mentioned above. The merger with DFT gives its added capacity in Northern Virginia, Chicago and Silicon Valley. More importantly, it expands Digital Realty’s presence in the hyperscale segment, where top-tier cloud and content companies are eager to sign long term leases in major markets rather than going through the trouble of acquiring land, gaining permits and then building data centres on their own. DLR estimates that capex investments for hyperscale cloud infrastructure amounted to $26.3 billion in 2016, up from $21.1 billion in 2015.

In Northern Virginia's Data Center Alley, DLR already operated 17 data centres with a combined 2.2 million sq feet of space. DFT adds nine prime buildings. So now, the combined DLR will have a total of 26 data centres and 4.4 million sq feet of space within a 20-mile radius. With today's data centre interconnect (DCI) DWDM technology, the company will have the opportunity to tie these metro facilities together like never before. In Chicago, the merger will give DLR a combined 7 data centres and 2.5 million sq feet of space in a 25-mile radius. And in Silicon Valley, DLR will have 16 data centres and 2.1 million sq feet of space in a 7-mile radius.

Digital Realty's CEO A. William Stein commented, "This strategic and complementary transaction significantly enhances Digital Realty's ability to support the growth of hyper-scale users in the top U.S. data centre metro areas, while providing meaningful customer and geographic diversification for DuPont Fabros".

As for combined customers, an investor presentation following the merger announcement listed IBM, Facebook, CenturyLink, Rackspace, Equinix, LinkedIn, AT&T, JP Morgan Chase, Verizon, Dropbox and other marquee names.

Continuing the consolidation

The DFT-DLR deal is certainly notable for its rich valuation. It adds momentum to a sector that we already knew was red hot. In May, Equinix completed its acquisition of 29 data centres and their operations from Verizon Communications. This deal was valued at $3.6 billion in cash. Combined, the acquired properties cover approximately three million gross sq feet of data centre space. Also in May, private equity funds including Medina Capital Advisors and Longview Asset Management acquired CenturyLink's data centres and colocation for $1.86 billion. This deal consisted of CenturyLink's portfolio of 57 data centres which includes approximately 195 megawatts of power across 2.6 million sq feet of raised floor capacity. From the numbers we can see that there is no clear correlation between acquisition price and sq footage. As with all real estate, location is the prime factor, which brings the top tier customers in search of hyperscale space.

NTT Com deploys Coriant Groove to interconnect HKG data centres

Coriant announced that NTT Com has deployed the Coriant Groove G30 Network Disaggregation Platform to interconnect multiple data centre sites in Hong Kong to improve fibre utilisation and enable 100 Gbit/s and higher data centre interconnect (DCI) services.

Designed to provide hyper-scale density with low power consumption, deployment of Coriant's Groove G30 solution allows NTT Com to increase utilisation of its fibre infrastructure and cost-efficiently deliver high speed DCI services optimised to meet the mission-critical traffic demands of regional and global customers.

Coriant noted that, as a pioneer in the implementation of SDN-enabled connectivity between enterprise clouds, colocation data centres and customer-owned data centres, NTT Com is a leading provider of next-generation networks. The operator has deployed the Groove G30 in an alien wavelength application over its existing DWDM infrastructure. The solution offers an open, plug-and-play modular architecture designed to speed service deployment and enable efficient transport.

The Coriant Groove G30 platform is designed to enable the provision of programmable, high speed secure bandwidth for mobile, video and cloud applications. The stackable solution supports 3.2 Tbit/s of throughput in a compact and pluggable 1 RU form factor and enables service providers and cloud and data centre operators to build scalable and secure transmission and optical solutions with functionality enabled via open APIs.

The Coriant solution also supports programmable DWDM line interfaces designed to optimise the bandwidth and performance of transmission at rates from 100 up to 400 Gbit/s for metro, regional or long-haul transport and DCI applications.


Earlier this year, NTT Com announced plans to deploy a 400 Gbit/s optical transmission system in its data centres, increasing the transmission capacity of its core network above 19 Tbit/s per fibre - more than double the existing capacity. NTT Com stated that the 400 Gbit/s rate leveraged digital-signal processing technology developed in house.

DOCOMO Pacific ATISA Guam subsea cable ready for service

DOCOMO Pacific, a service provider in the Marianas and a subsidiary of Japan's NTT DOCOMO, announced that construction and testing of the 183-mile ATISA submarine optical cable system connecting Guam to the Commonwealth of Northern Mariana Islands (CNMI) has been completed and the system is now ready for service.

The ATISA submarine cable, for which a supply contract was signed in February 2016, was recently landed and connected to the terrestrial fibre networks on Guam, Saipan, Tinian and Rota. The system will be launched with an initial operating capacity of 200 Gbit/s, while offering a total design capacity of 7.2 Tbit/s.

DOCOMO Pacific will now begin providing connectivity services to enterprise customers, and stated that it is already serving its first enterprise partner, the Commonwealth Port Authority, which operates the Francisco C. Ada Saipan international airport, with high-speed Internet connectivity. ATISA also connects the CNMI with Guam, where local businesses and government agencies can connect to other cable systems.

Additionally, from August this year, DOCOMO Pacific plans to start offering mobile, cable TV, online and home telephone services for residential customers in the CNMI.

For the ATISA cable system, DOCOMO Pacific selected NEC to design and build the cable and Ciena's submarine GeoMesh solution to provide 100 Gbit/s wavelengths and to facilitate the delivery of new on-demand services for end users. The Ciena solution is designed to offer scalability to support communications requirements over the lifetime of the cable.

Additionally, Ocean Specialists (OSI), a submarine optical cable consulting firm, advised DOCOMO Pacific on the project and provided project management support.


DOCOMO Pacific noted that ATISA is the second undersea cable in the CNMI and the first new system to be built in nearly twenty years. The company stated that the cable system involved investment of over $16 million for the cable, plus an additional $9 million to modernise and expand its fixed and mobile networks in the CNMI.


Mellanox forms strategic agreement with HPE

Mellanox Technologies announced a strategic collaboration with HPE covering high-performance computing and machine learning data centres, and also introduced SHIELD, an interconnect technology that is claimed to improve data centre fault recovery by 5,000 times through providing interconnect autonomous self-healing capabilities.

HPE collaboration

Mellanox collaboration with HPE is designed to enable efficient high-performance computing and machine learning data centres based on technologies from both parties. The joint solutions are intended to enable customers to leverage the InfiniBand and Gen-Z open standards to enhance return on investment for current and future data centres and applications.

Leveraging Mellanox's intelligent and In-Network Computing capabilities of ConnectX-5 InfiniBand adapters and Switch-IB2 InfiniBand switches in the recently launched HPE SGI 8600 and Apollo 6000 Gen10 systems the companies can offer scalable and efficient high-performance computing and machine learning fabric solutions.

The collaboration will enable both companies to develop technology integration and use the forthcoming HDR InfiniBand Quantum switches, ConnectX-6 adapters and future Gen-Z devices. In addition, joint development work with HPE's Advanced Development team will support the advance to Exascale computing.

SHIELD

The new SHIELD technology is enabled within Mellanox's 100 Gbit/s EDR and 200 Gbit/s HDR InfiniBand solutions, providing the ability for interconnect components to exchange real-time information and to make instant smart decisions to help overcome issues and optimise data flows. SHIELD is designed to enable greater reliability, more productive computation and optimised data centre operations.


Switzerland's Sunrise deploys RAD performance monitoring

RAD announced that Sunrise Communications, the second mobile operator in Switzerland with around 3 million subscribers, has selected its Service Assured Access (SAA) solution to guarantee high performance services for customers.

Sunrise offers fixed-line, IPTV and Internet access, as well as business and IT services, in addition to its mobile offerings, which include LTE and LTE-Advanced (LTA-A, or 4G+). RAD noted that currently much of this IP traffic is carried over microwave links, which adds latency and jitter and can result in packet loss. To address this issue, Sunrise required a cost-effective performance monitoring solution to ensure QoS across all network segments and guarantee end-to-end QoE for customers.

Sunrise has selected the RAD performance monitoring overlay solution as an add-on to its existing network. RAD's performance monitoring (PM) solution features PM controllers, which monitor and collect data on network traffic and service quality using a range of protocols, including both versions of TWAMP, as well as its patented MiNID, a field-programmable miniature Carrier Ethernet and IP network interface device (NID) that serves as a remote testing probe.

For the project, PM controllers have been deployed at Sunrise's central sites, where they collect performance monitoring data. In addition, the MiNID products are placed at intermediate measurement points and multiple eNodeBs, where TWAMP support is not otherwise available. This model is designed to allow all elements in the network to quickly match their testing capabilities.

RAD stated that the ability to rapid integrate its technology with Sunrise's central management system ensures that performance data is instantly available to enable corrective measures to be taken. It added that a key advantage of this architecture is the ability to conduct a variety of diagnostic tests utilising the MiNIDs between individual eNodeBs.


Regarding the deployment, Dragan Ciric, senior manager, transport network at Sunrise, commented, "For detected issues, Sunrise is able to segment the problematic service path, measure the performance on each segment and in this way quickly identify the root cause… moreover, the solution supports full TWAMP and the newer TWAMP Light in a single device, which enables flexible monitoring… (with) reduced capex".


Broadband Forum establishes Gfast Council

The Broadband Forum announced the launch of the Gfast Council, established with the goal of centralising and disseminating expertise and experience relating to the G.fast market to support the deployment of G.fast technology.

To facilitate the roll-out of solutions based on G.fast technology, which enable the provision of gigabit broadband access over existing wiring infrastructure, the new Gfast Council will hold industry events, issue white papers, detail use cases and provide other resources to promote adoption of the technology.
The council will also promote the Gfast Certification program, which has announced the first certified, interoperable products, to help accelerate the availability of interoperable solutions and aid integration into service provider networks.

Open to all Broadband Forum members, the Gfast council will represent the Broadband Forum and the Gfast community at industry events such as the TNO Ultrafast broadband event held this week in The Hague.

Separately, the Broadband Forum announced the first six products to have successfully completed the new Gfast certification program, hosted in the forum's Gfast test lab at the University of New Hampshire InterOperability Laboratory (UNH-IOL), in accordance with the forum's IR-337 certification test specification.

The initial products certified under the program are from ARRIS, Calix, Huawei, Metanoia, Nokia and Technicolor, and have been awarded the Gfast device certification. The first products to be certified are based on chipsets from Broadcom, Metanoia and Sckipio.


In addition, the UNH-IOL has made the Gfast test automation software commercially available. The software controls the Telebyte test and measurement equipment, enabling device manufacturers to pre-test devices in their own labs and service providers to regression test software updates from vendors.


ZTE completes 26 GHz field testing in Beijing

ZTE claims that it has become the first vendor to conduct 26 GHz high-frequency field tests during the second phase of China's 5G test in Huairou, Beijing.

ZTE stated that it led the 26 GHz high-frequency field testing of its 5G new radio (NR) pre-commercial base station, which was demonstrated to deliver strong performance in interconnecting with the instruments and chips from a number of manufacturers. In addition, ZTE has applied to conduct official tests using frequency bands greater than 40 GHz in its Shanghai R&D centre as part of its efforts to develop solutions for the high frequency bands.

ZTE noted that the 5G testing is led by China, and organised and implemented by the IMT-2020 (5G) Promotion Group, which includes the China Academy of Information and Communications Technology (CAICT), China Mobile, China Telecom, China Unicom and DOCOMO of Japan.

The latest 5G test program in China is covers technical solution verification as part of the second phase of testing and focuses on verifying technical solutions in the areas of continuous wide coverage, high capacity (low and high frequency), low latency and high reliability, low power consumption and hybrid scenarios.

ZTE added that China started to build the 5G test program earlier this year, which is believed to be the largest such test initiative, as well as the most advanced, and is based on an open test platform. Through the program, China is aiming to integrate core strengths in the industry and to promote global 5G standardisation and technology development.

Following the completion of the first phase of China's 5G technology R&D test, ZTE noted that it is engaged in the second-phase testing. Using its latest IT baseband unit (BBU), 5G multi-band active antenna unit (AAU) and NR air interface technologies, ZTE has launched field tests designed to address key performance requirements in typical application scenarios such as enhanced spectral efficiency, greater connection density, higher reliability and lower delay air interfaces.

http://www.zte.com.cn/global/about/press-center/news

oyment of 3D-MIMO, also termed Pre5G Massive MIMO in the city of Quanzhou in Fujian province.ZTE stated that with 16 commercial terminals connected, the single-carrier downlink peak cell rate has been increased to 730 Mbit/s, with a single-carrier 16-stream downlink peak rate using 3D-MIMO of up to 700 Mbit/s achieved. In addition, a three-carrier rate of up...

Metanoia Gfast chip deployed by Swisscom

Metanoia Communications, a subsidiary of Elan Microelectonics based in Taiwan and developer of high-speed xDSL and Gfast PHY chipsets for wireline broadband applications, announced that it has achieved two key milestones in its Gfast product strategy.

Firstly, Metanoia was part of a product deployment based on its Gfast chip embedded into an SFP solution provided by Swisscom, the incumbent operator in Switzerland; secondly, the company's MT-G5321-based Gfast CPE and DPU products have been certified by the Broadband Forum (BBF) and the University of New Hampshire InterOperability Laboratory (UNH-IOL) under the forum's recently launched Gfast Council initiative.

Metanoia noted that mass deployment of the SFP-based Gfast solution by Swisscom commenced recently, designed to enable the operator's customers to benefit from improvements in broadband service throughput and reliability without the need to change the router.

The company also stated that the recent announcement of Gfast Certified products by the BBF, in accordance with its IR-337 certification test specification, is designed to support industry interoperability and expand acceptance of the technology for mass market deployments.

Metanoia's Gfast technology is based on a single configurable device, the MT-G5321, which is designed to be embedded into both CPE solutions, such as SFP units that can be plugged into existing or future home gateways with an SFP cage, and CO solutions, for example low power, single port DPU solutions.



* In October 2016, Metanoia announce it had achieved interoperability between its Gfast solution and the Gfast solution used in Swisscom's DPUs.

See also