The Real Money is in the Cross Connects

About a year ago I heard a stat that One Wilshire had 40 Gbit/s of utilization on their Fast Ethernet cross connects. Honestly this number floored me for a few reasons:

  1. an average circuit will run at 30% utilization, this means that CRG had approximately 1,300 Fast Ethernet circuits run at the time. Or in revenue numbers, been $65k/month in fast ethernet cross connect fees.
  2. Fiber cross connects are the overwhelming majority of installed circuits at any carrier neutral site. I couldn't say what the exact ratio is but based on my personal experience Fiber to Ethernet is something on the order of 20 to 1. This would mean One Wilshire was billing $2.6/month in fiber cross connects.
  3. One Wilshire is a relatively inexpensive location for cross connects, other facilities are way more expensive and could be billing way more.

While the largest revenue items for a given facility will most certainly be floor space and power, those also carry the highest cost of goods sold. With cross connects the facility bears a one time charge for the materials and labor (which is usually billed to the customer as an installation fee) and after that there is almost zero expense ongoing to service the cross connect. The margin is nearly 100%.

Like I said, the real money is in the cross connects.