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Carrier Hotels: How Critical Connectivity Hubs and Data Centers Keep Communities Connected

In today’s rapidly evolving digital landscape, carrier hotels are the unsung heroes that keep our world connected, facilitating everything from streaming videos to cloud computing. Originally designed to facilitate the interconnection of telephone exchanges, these facilities have undergone a remarkable transformation, adapting to the shift from voice to data communications and becoming the backbone of the internet as we know it today. In this digital age, they have evolved into vital connectivity hubs.

The Origins of Carrier Hotels

The concept of carrier hotels emerged from the need to efficiently transfer traffic between various network routes. As the number of long-distance carriers grew, it became increasingly challenging to duplicate extensive cabling and network equipment. Carrier hotels provided a centralized solution, allowing different networks to interconnect and exchange traffic, seamlessly.

However, a vast majority of these facilities didn’t start out as purpose-built data centers. They organically evolved into carrier hotels as service providers dropped their networks into buildings that were strategically located at network crossroads—often near railroads, highways, or existing infrastructure routes. These locations, typically in major urban areas, were ideal for network interconnection, allowing multiple carriers to converge in a single building.

Several of today’s key connectivity hubs started as ordinary buildings—1547’s Milwaukee facility, the Wells Building, for instance, was once the headquarters of Western Union Telegraph Company; Pittock Block in Portland, OR, initially designed as an office building with a sub-basement housing Northwestern Electric Company’s substation; the Chase Tower in McAllen, TX, originally built as a banking facility; and Union Station in South Bend, IN, which was originally a train station. These facilities naturally transitioned into network connectivity hubs and, over time, 1547 retrofitted them to accommodate data center operations, driven by the growing demand for interconnectivity.

The Rise of the Internet and Connectivity Hubs

The Early Foundations of the Internet

The U.S. Department of Defense laid the early foundations of the internet and data connectivity in the 1960s by creating ARPANET, a packet-switched network designed to share data between research sites. Through the 1970s, other data transmission networks like Telenet and X.25 emerged, paving the way for the standardization of the TCP/IP protocol suite in 1983, which marked the official birth of the modern internet.

The Evolution of Internet Access

In the 1980s and early 1990s, internet access for homes and businesses was primarily through dial-up modems over telephone lines, offering extremely slow speeds of just 1200 bps initially. In the early days of internet access, using the phone and internet simultaneously wasn’t possible, as most connections relied on dial-up.

The introduction of the World Wide Web and the first web browser in 1990 made the internet more user-friendly and drove wider adoption. The broadband revolution began in the mid-1990s with the deployment of DSL, cable modems, and fiber optic networks using WDM technology, providing much faster and always-on internet connectivity.

The 2000s ushered in the era of mobile internet with the advent of 2G and 3G networks, enabling wireless data connectivity for mobile devices. The rollout of 4G LTE networks in the late 2000s further enhanced this by offering true mobile broadband speeds. The latest milestone is the deployment of 5G networks in 2019, delivering multi-gigabit wireless speeds and low latency, enabling high-bandwidth applications like video streaming, cloud computing, and the Internet of Things.

Despite these advancements, the digital divide persists, with only 67% of the global population using the internet as of 2023, mainly due to infrastructure gaps and affordability issues in developing countries. Efforts to bridge this divide and achieve universal, meaningful connectivity remain crucial for ensuring equitable access to the benefits of the digital age.

Carrier Hotels: From Telephone Exchanges to Connectivity Hubs

With the advent of the internet and the transition from voice to data communications, carrier hotels underwent a significant transformation. Many historic buildings, like 60 Hudson Street in NYC and 529 Bryant Street in Palo Alto, transitioned from telephone exchanges to major connectivity hubs, thanks to their strategic locations and existing infrastructure. These buildings, once the nerve centers of the telegraph and telephone networks, now carried packets of data along fiber optic cables, enabling the seamless exchange of information between telecommunications carriers, internet service providers (ISPs), cloud platforms, and content delivery networks (CDNs). 350 East Cermak Road in Chicago and 111 8th Avenue in New York City, both initially designed as office buildings.

The Importance of Carrier Hotels in the Modern Digital Age

In today’s digital landscape, carrier hotels have become indispensable hubs for interconnectivity, exchanging data from major cities to connectivity hubs in urban communities, closer to the end-user. These urban connectivity hubs offer a range of benefits that drive demand for these facilities:

Resiliency and Redundancy

Compared to data centers located in major markets, urban connectivity hubs offer a significant upgrade in reliability, making them suitable for businesses that require higher availability and cannot afford frequent downtime. They provide uninterrupted service by using redundant power and cooling systems, ensuring 100% uptime for the networks they host. 1547 builds these facilities to the highest standards, offering best-in-class infrastructure and redundancies to support mission-critical operations.

Carrier Diversity and Cost Optimization

By colocating within a connectivity hub, organizations gain access to a diverse range of network providers, enabling them to choose the most suitable carrier for their needs. This competition among carriers drives down network costs and improves performance, making connectivity hubs an attractive option for businesses seeking cost-effective and high-performance connectivity solutions. However, their enhanced redundancy and carrier diversity require more sophisticated infrastructure and higher operational costs, especially when reusing existing infrastructure. This makes connectivity hubs more expensive to retrofit but also provides better performance and reliability as in the case with 1547’s Wells Building facility in Milwaukee.

Access to Cloud Providers

Connectivity hubs have evolved to become home to major public cloud service providers like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP). Connectivity hubs offer higher level of access to cloud providers and typically have more robust infrastructure, including redundant power and cooling systems which enhances their reliability and uptime. This makes them more attractive to cloud providers who require consistent and dependable service.

As a result, connectivity hubs are more likely to host direct connections to major cloud providers, offering businesses faster and more reliable access to cloud services, content delivery networks, and other critical applications. A prime example is 1547’s AlohaNAP and Pittock Block data centers, which both serve as Amazon Web Services (AWS) Direct Connect locations. In these data centers, businesses can reap the benefits of having a dedicated network connection that links their infrastructure in these facilities directly to AWS. Cloud providers recognize the need to establish their network nodes, or onramps, within connectivity hubs, allowing their customers to access cloud services with lower latency and higher bandwidth.

The Future of Carrier Hotels

The Growing Demand for Data Center Infrastructure

While the data center market continues to evolve, and with the rise of hyperscale facilities and containerized edge deployments, connectivity hubs remain the cornerstone of global connectivity. CBRE expects data center infrastructure demand to grow significantly, with revenue from generative AI software projected to increase at a 58% compound annual growth rate from 2023 to 2028.

The Increasing Importance of Connectivity Hubs

As data demands surge and the need for low-latency, high-performance connectivity grows, connectivity hubs will play an increasingly vital role. Their ability to interconnect diverse networks and provide access to cloud providers position them as essential components of the digital infrastructure that supports our increasingly connected world. Tax incentives, renewable power advancements, and affordable power supply will increase the number of connectivity hubs in secondary markets, closer to the edge.

Shifting Markets and the Role of Secondary Markets

The shift to remote work and movement of people away from major cities are driving the need for more distributed computing resources, benefiting connectivity hubs in secondary markets. Adaptive reuse projects have been a growing trend with a 30% increase over the past decade with many located in urban downtown areas which are historic in nature. These historic facilities, once the artifacts of the early internet era, have proven their resilience and adaptability, solidifying their role as critical hubs in today’s digital landscape. Key examples of this within 1547’s portfolio include the Wells Building in Milwaukee, WI, the Pittock Block in Portland, OR, Chase Tower in McAllen, TX, and the Union Station data center in South Bend, IN, all of which 1547 has retrofitted to accommodate modern connectivity needs.

The Evolution of Carrier Hotels: A Look to the Future

The history of carrier hotels and connectivity hubs is a testament to the remarkable evolution of telecommunications and data connectivity. From their origins as telephone exchanges to their transformation into the backbone of the internet, these facilities have adapted to meet the ever-changing demands of the digital age. As we look to the future, connectivity hubs will continue to drive innovation, enabling seamless connectivity, low-latency access to cloud services, and the deployment of edge computing capabilities, shaping the digital experiences of tomorrow.

As demand for low-latency, high-performance connectivity grows, now is the perfect time to partner with 1547. Contact us today to explore how our highly connected data centers can support your mission-critical operations.