Net Access Blog

Raul Martynek on Telecom Exchange East 2014

Posted by Raul Martynek on Jun 27, 2014 1:06:00 PM

Raul Martynek on Telecom Exchange East 2014 in NYC

Raul Martynek CEO Net Access

We attended the Telecom Exchange 2014 show in NYC on Thursday.  The event was original called the “Telx CBX” and grew into one of the largest and best-attended telecom/Internet/datacenter event in the New York Metro area for many years.  Telx stopped hosting the event after their sale to GI Partners.  Fortunately, Jaymie Scotto & Associates has continued to run it under the banner of “The Telecom Exchange”.

The event has lost some of its luster, most likely attributable to the increased consolidation across the entire sector and operators hosting their own events. However, it is still a pretty good way to get a pulse on the telecom/Internet ecosystem in NYC and surrounding areas.

Level 3 – Time Warner Cable Merger 

The main buzz at the show was around the recent announcement of the Level 3-Time Warner Telecom merger.  I personally know quite a few folks at both firms and in a word, everyone is “nervous”.  The $7.3B deal makes a huge amount of industrial logic by integrating the network assets, products and customers of the largest independent long haul provider with the largest independent metro fiber provider. 

Both companies are focused on wholesale and enterprise solutions via on-net fiber and the combined TW/L3 should be better positioned to compete with the behemoths of AT&T, VZN, Comcast-Time Warner Cable and CenturyLink. 

This deal is yet another event in the continuing consolidation of the telecom sector in the US, with another recent example being the AT&T-Direct TV deal. 

Level 3 has 10,200 employees globally with about 7,000 in North America and TW Telecom has 3,400 employees.  Level 3 has communicated to Wall Street that the transaction will support $200M in operating synergies.  Translation:  about 2,000 jobs at a fully loaded cost of 100,000 per employee.  That’s a lot of people.

Aereo ruling 

The other big story was the news of the Supreme Court decision on Aereo.  Aereo founded in 2012, developed a novel technology to capture over the air broadcast signals and stream them to subscribers over the Internet.  The big broadcast companies in the US cried foul as they claimed copyright infringement.  Aereo’s response was that their technology did not violate intellectual property rights as they were simply “renting” individual dime sized antennas to users, and US law allows individual users to receive over the air broadcast signals without payment.  

The Supreme Court did not agree with Aereo and in a 6-3 ruling sided with the Broadcasters saying that:

“Aereo’s behind-the-scenes technological differences do not distinguish Aereo’s system from cable systems, which do publicly perform.” 

In other words, even if you can figure out a clever technological method to capture signals and provide content, ‘Content Is King’ and is protected.  This likely means the end of the company as their business model was premised on not paying broadcasters for content. 

At the event I met a few firms that had been supplying bandwidth and connectivity to Aereo who are understandably very worried.  There are sure to be some knock-on effects in the sector as this plays out.

Now the good news. 

Despite the consolidation in the sector and defeat of Aereo, there were also plenty of signs of new shoots growing in the telecom and Internet space.  I met several new fiber companies, started only in the last few years or so like Hudson River FiberCross River Fiber and FirstLight Fiber.  I also spoke with a supplier of fiber components who informed me that their business was booming in the US as the need for bandwidth is driving all sorts of industry players to invest in fiber (Google, Incumbents, regional, MSO, etc).  That’s good news for users as fiber ultimately has the lowest cost per incremental bit compared to other delivery technologies.  It seems as if as the consolidation at the top of the pyramid continues, it creates new opportunities in niche areas further down the chain.

Raul Martynek, CEO Net Access

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Topics: data center, colocation, managed services, nac ceo

The Decision on Legacy Services by CEO Raul Martynek

Posted by Raul Martynek on Apr 24, 2014 1:00:00 PM

Joining Net Access

Raul Martynek CEO Net AccessI just passed my three-month anniversary here at Net Access and must say that I am really excited to have joined.  I spent the first two months focused on learning everything I could about the company.  I met one-on-one with every employee in the company for 25-40 minutes, studied our financials, spoke with customers and prospects, inspected our datacenter and technology assets and worked closely with our sales and marketing team.  Overall, we have a very solid business with dedicated employees and loyal customers.  Net Access has a great platform with lots of potential and a very bright future.
One of the things I discovered about NAC was that it began as a Dial-up ISP in the mid-1990s.  Over the course of the Internet “bubble” years, they grew the business to have over 20,000-30,000 customers!  This brought back memories of my early years working with a Telco/ISP that also sold dial-up, POP/IMAP email, and websites; anyone remember V.90 and Eudora?!  Obviously, dial-up gave way to DSL and cable and most companies either sold it or went away.  It was during this time, NAC decided to find a new focus: Colocation and Data Centers services.  NAC took a small data center in a multi-tenant office building, and grew it into a premium world-class provider of Tier III data center and colocation services!  Today, data center and colocation remain the core services of the company.
Although the heydays of dial-up and DSL are long gone, I learned that we still had a segment of revenue and customers from the early years.  In fact NAC had an entire group still dedicated to supporting these “legacy” services and customers.  Many of these customers have been with NAC for 10 or 15 years.  While the revenue impact was small (and the profit even smaller), supporting these customers required the involvement of all areas of the company – finance, billing, collections, engineering, NOC, etc.  As I finished up my “one-on-ones” with all of the folks in the company, I realized collectively, NAC was spending a significant amount of time and energy supporting these legacy services that had stopped being “core” of the company a long time ago.  

In business, it is important to focus.  

As someone once told me, “it is more important to know what you don’t do in business, rather than what you do.”  Every moment we spent on legacy services was an opportunity that we lost to evolving and growing our premier data center and managed services business.  Unfortunately, the time had come for us to get out of the legacy business.
So about one month ago, we made the decision to divest our early Internet, legacy business services.  We notified our customers that we would no longer provide these services and advised them on how to find an alternative service provider.   In some cases we were able to transition the customers to other providers and avoided any service disruptions.  For other services, we were unable to find service providers willing to take over the customer transfers.  For these customers, we have provided a transition period of up to six months to allow them time to find providers or to transfer their data.  We are very grateful and honored to have been the provider of choice for so many customers, for so many years.  We sincerely thank you for your patronage.

Our Future

Going forward, we intend to only focus on our core data center and managed services business.  Data center, colocation and managed services is a very exciting and growing sector and we believe we can become one of the leading providers in this space.  I look forward to sharing our efforts and journey with you in future blog posts.

Raul Martynek, CEO Net Access

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Topics: data center, colocation, managed services, nac ceo