Capitalizing on Colo: GCN Grows Agency with Global Colocation, Connectivity

special requirements, such as iron-cladding around cage walls. There are a number of  logistical considerations, too, down to how the servers will arrive and when. Some colos cannot fit palates into their elevators, for example, and disposing of trash (palates and wrapping) must be figured into the cost.

“You really don’t think about everything that goes into project management of these things. It’s not the typical agent/subagent relationship where you say, ‘Hey can you pay me 25 percent and put in some racks in Frankfurt?’” Palermo explained.

This attention to detail has earned GCN additional business from its existing colo clients as well as referrals. Some of these referrals are coming from the colos themselves.

GCN is paid by the colo providers under an agency agreement, which pays a percentage – 7 to 12 percent per month. (These commissions are separate from the amounts earned on transit sourced with the colo deployment.) However, some operators offer only one-time payments based on a percentage of the monthly recurring charge for a year. So 10 percent of a $10,000 MRC for a year would be $12,000. That isn’t enough to justify GCN’s efforts, so Palermo has been waging a campaign to get residuals instead. Because of the large revenue amounts GCN brings to the table, he has been successful in some cases. Palermo has recruited two other agencies that sell colo to help in this effort (see Colo Agents Form Consortium).

GCN’s recent success with the colocation opportunity has not been to the exclusion of its core SMB business. In fact, Palermo has a program to compensate internal account managers as if they were subagents for upselling these customers on additional services. GCN has segmented its base according to the percentage of telecom spend through GCN. “If we don’t have that full share of the wallet, we have that big a percentage chance of losing that customer to someone else who is going after that,” Palermo said.

Colocation likely will be one of the upsells. The week of this interview in February, there were three inquiries about colocation from the installed base. “There’s one customer that might want 10,000 square feet in Dublin,” Palermo said. And, GCN will be there to make it happen.