Consolidated takes a creative approach to data center wholesale services

Consolidated Communications, which has continued to expand its consumer and business/wholesale-grade networks, sees an opportunity to target hyperscaler data centers with its growing mix of lit and dark fiber services.

With data center connectivity demands rising due to the emergence of AI, Consolidated recently expanded its network reach and the availability of high-capacity services. But the company thinks that to be successful, providers can’t approach prospects with a business-as-usual attitude.

Sean Baillie, SVP of Carrier, Channel, and Hyperscale at Consolidated Communications, said what sets the company apart is listening to what customers need, not just to secure the sale, but also to serve as a long-term partner.

“We interact heavily with our prospects and customers,” he said. “We tell them we can do whatever you need, and if it’s doable, we’re going to find a way to get it done right.”

Baillie should know how to take a different approach to wholesale networking. Before joining Consolidated, he held positions at various pioneering fiber-focused providers, including UUNET, Level 3, Intellifiber, and Mid-Atlantic Fiber.

What he said is that the industry cannot take a business-as-usual approach to pursuing wholesale fiber data center opportunities. “There's a creativity element that you don't hear talked about in our industry,” he said. “When we were all building fiber networks 25-30 years ago, it was in the air, but it's been lost, and we are bringing that back and are displaying that in our conversation.”

Sean Baillie, SVP of Carrier, Channel, and Hyperscale at Consolidated Communications.

Setting wholesale priorities

As the data center industry’s needs continue to evolve, Consolidated has responded by expanding its platform and delivering high-capacity network options for Data Center Interconnect (DCI). DCI technology connects two or more data centers over short, medium, or long distances using high-speed packet-optical connectivity.

Consolidated recently announced it was expanding its fiber network across major data center hubs. Offering a platform that delivers Ethernet and optical wavelengths, Consolidated’s fiber footprint serves data centers across the Upper Midwest, Texas, Northern California, and its newest unique route connecting Montreal and Boston.

Consolidated offers various options, including dark fiber, Ethernet, 100/400G DWDM wavelengths, Unique/Low-Latency routes, and Construction as a Service (CaaS). These expansions enhance network diversity, lower latency, and increase bandwidth capacity, ensuring seamless data transfer and operational continuity for businesses and service providers.

Baillie sees Consolidated playing in serving two segments—third-party data center wholesalers and hyperscalers that build their data centers. “The way we think about the market is that there's a kind of natural separation,” Baillie said. “One is the third-party wholesaler market, including Databank, Digital Realty, and on the other side is the hyperscalers, which purchase a little bit from the third party, but more and more especially at the upper end of hyperscale, they build their data centers and their campuses.”

The service provider offers a range of capacity options, from low-level gigabit to multi-terabit systems, and everything in between.

While it's a high-growth market, Consolidated has evolved its approach to serving data centers. “Consolidated has a fairly lengthy pass in this market, but I would say we resharpened our focus,” Baillie said. “We’re going directly into this market with a well-thought-out strategy of staff around an execution arm and capital.”

The hyperscale opportunity

While Consolidated is aware of how AI is influencing data center growth, the company sees more interest from hyperscalers needing expanded capacity.

The company has responded by expanding its platform and delivering high-capacity network options, including fiber-to-wavelength and Ethernet services. “AI is still nascent,” Baillie said. “AI is getting a lot of press, but I'm interested in who's spending money against that.”

In the meantime, Consolidated is seeing demand from hyperscalers rise—a trend that is unlikely to slow down anytime soon.

And while Consolidated sees AI as being in the early innings, it is prepared to accommodate the growth it will bring in its data center customers.

“If you just look at what's happening across the country, public announcements are all over the place about AI campus builds and landbanking,” Baillie said. “We're now seeing the hyperscalers entering this market. They are dedicating a tremendous amount of capital against it, not only to build campuses, but to have custom high-capacity infrastructure built to support them.”

He added that “over time, AI use cases adopted by the enterprise are going to find their way into third-party wholesale data centers.”

Consolidated is addressing these needs with its Construction-as-a-Service (CaaS) solution. CaaS allows businesses to outsource the construction and management of their network infrastructure, particularly for data center connectivity. It has geared CaaS towards the needs of data centers, which often require high-bandwidth, low-latency, and reliable connections. Data center customers can scale their network capacity up or down according to their business needs.

At the heart of its CaaS service is its fiber network. Leveraging its fiber network, Consolidated can build and manage the physical infrastructure for data centers. CaaS encompasses services such as Ethernet, DWDM, and specialized low-latency routes to enhance data center connectivity and performance. The company claims its CaaS solution can help businesses optimize their capital expenditures by leveraging Consolidated's expertise and infrastructure.

Like how Consolidated builds private fiber services for enterprises, it is also identifying opportunities to develop networks tailored to the unique needs of data center providers.

“We will go and build these multi-conduit systems with high fiber counts, so we’re extending our network into data centers, which is on our road map,” Baillie said. “The hyperscalers will put campuses up, and they'll want custom networks dedicated to what they're doing, which is a different flavor, and that's what we mean when we say construction as a service.”

Consolidated Communications' fiber network spans 23 states and currently serves a growing roster of over 155 data centers.

Lit, dark services demand

Depending on the use case, Consolidated can address data centers from its wholesale perspective by delivering various services, including Ethernet, optical wavelengths, and dark fiber.

Like other service providers, Consolidated continues to capitalize on the growing popularity of optical wavelengths, particularly 100G and 400G.

In its 2024 U.S. Wavelength Services LEADERBOARD, Vertical Systems Group noted that customer demand for 400 Gbps wavelength services is increasing, driven by hyperscalers, data center connectivity, cloud providers, and enterprises with heavy data transfer requirements.

Additionally, the research firm noted that most major providers offer 100 Gbps wavelength services throughout their footprints and are currently expanding their installations to 400 Gbps. However, the 800 Gbps wavelength service segment has been slower to take off.

Today, Consolidated has primarily been selling 100 G and 400G wavelengths to data center providers. In a typical configuration, Consolidated will be connecting one data center to another.

“We will typically provide wavelengths to get from a third-party wholesaler to a cloud provider,” Baillie said. “If a customer needs to get to an IP network, they will have to stitch up multiple corporate data centers that house different workloads, so they want wavelengths for that.”

In other instances, a customer may need to connect its workloads in a data center to its enterprise locations, which can be achieved using Ethernet, Dedicated Internet Access (DIA), or Software-Defined Wide Area Network (SD-WAN).

Baillie said that it has deployed all these capabilities in its on-net data centers, “optical wavelengths are the number one driver of bandwidth.” Alongside lit services like wavelengths, Consolidated also sells dark fiber solutions as part of a dedicated private network package.

However, Baillie noted that providers with specific requirements primarily use dark fiber. “If I'm a sophisticated large enterprise with a lot of data, I would like to deploy a dark fiber network that I control and I can put my gear on it,” he said. “We see that here and there. There aren't that many buyers that are that sophisticated, but they are out there, and we will do it.”

On-net, near-net opportunities rising

Armed with its experience in serving data centers, Consolidated is expanding its fiber network across major data center hubs. Offering a platform that delivers Ethernet and optical wavelengths, Consolidated’s fiber footprint serves data centers across the Upper Midwest, Texas, Northern California, and its newest unique route connecting Montreal and Boston.

To date, Consolidated serves over 150 customers on its Data Center platform. However, the company sees that number will continue to grow because of the pace at which data centers are being built.

“For the on-net and near-net data centers, we continue to invest in fiber expansion and advanced high-capacity solutions to ensure our customers have the infrastructure they need to support their tenants’ capacity and latency requirements,” said Baillie.

The company has identified various hotspots in the Western and Eastern parts of its network. In California, a market bolstered by its acquisition of the former SureWest, Consolidated, has seen increased demand around Sacramento and within Sacramento itself.

Likewise, Texas remains a thriving hub for data centers. Consolidated has over 50 data centers connected in Texas. “Texas is a massive data center market and has a lot of investment still to come, and we have our Dallas, Austin, San Antonio, and Houston (DASH) network there,” Baillie said. “Texas also happens to be the state where we have the highest number of on-net data centers.”

In addition to the data centers it has connected to its network today, Consolidated sees plenty of near-net data center opportunities to pursue.

Besides the Texas market, Consolidated is pursuing opportunities throughout the Midwest, including Minnesota, the Dakotas, Chicago and Iowa.

“The Upper Midwest areas are strong and are attracting various types of customers,” Baillie said. “You have third parties up there that are doing quite well, and we have most of Minnesota on net. There's just a handful that we don't, but we're going to go get them.”

Looking towards the East Coast, Pennsylvania, including Pittsburgh, where it has 17-20 on-net data centers, as well as Northern New England, has also become a hotspot. “We've got a good foothold in Pennsylvania and then yes, Northern New England,” Baillie said. “So, Vermont, New Hampshire and Maine, we're everywhere up there.”

In tandem with Northern New England, Consolidated established a unique path from Montreal to Boston, which is gaining attention due to the unique right-of-way Consolidated is utilizing. Instead of going through Albany, NY, the service provider is using a route that bypasses Lake Champlain to the east.

Baillie notes that he thinks this will be a key route for the company’s wholesale business.

“Almost every provider that pulls traffic from Montreal into the states, or vice versa, runs it through the right-of-way (ROW) that runs through Albany, NY,” he said. “We don't do that. So, for the data centers in Toronto, Montreal, or Quebec, they're looking to push traffic to or pull from the states but want a diverse way to do it as well as the subsea folks landing in Nova Scotia.”

Having established on-net connections with 155 data center locations, Consolidated does not rest on its laurels. It has nearly the same number of near-net locations as it is also pursuing. The service provider, which takes a rigorous approach to establishing new connections, will continue to seek new builds this year and into the future.

Baillie said Consolidated has plenty of room to grow. “We have capital dedicated against this and are building into new data centers consistently, and new developments are coming,” Baillie said. “The tools we have access to show new developments are coming. So, what are currently land banks that don't even have operational data centers on them yet, but we know the operators and when they are going to start building.”

He added that the number of near-net data center opportunities is expected to continue rising. “I think that 155 same near net number is going to keep growing because data centers are continuing to be built,” Baillie said. “We're going to be in the middle of all this for a long time.”

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Hyperscalers scale data center builds, says Synergy Research
According to a recent Synergy Research Group report, the number of large data centers operated by hyperscale providers increased to 1,136 by the end of 2024, having more than doubled over the last five years. The research firm noted that it has taken less than four years for the total capacity of operational hyperscale data centers to double, as the average capacity of newly opened facilities continues to increase. The United States, said Synergy, “still accounts for well over half of total worldwide capacity, measured by MW of critical IT load, with Europe and China each accounting for about a third of the balance.”