Tech industry problems not dampening enthusiasm for Las Vegas data centers

When Las Vegas-area businesses move part of their technology operations into buildings around East Sahara Avenue and Lamb Boulevard, most people would never know it. Most of these nondescript windowless buildings lack company signs or logos.

Yet, this is the central hub for Internet traffic leaving and entering Las Vegas. There are big expansion plans for this industry in Las Vegas, despite concerns about whether there's enough demand to justify the planned investments.

This area of the valley is known as Telecom Cooridor, where the likes of MCI Worldcom, Sprint, XO Communications, Qwest Communications, Electric Lightwave and a handful of other fiber optic providers have there Las Vegas central "post offices" for Internet traffic.

As cyber-traffic, such as e-mails, get sent from an Internet user in Los Angeles, for example, to a Web-head in Green Valley, the message gets sent to this "point-of-presence" before getting routed to the destination computer in the southeast part of the Las Vegas Valley.

The fiber- and broadband-rich environment these telecoms are creating at Sahara and Lamb make the area attractive, some local techies say, for the growth of technology data centers, or "telco hotels," which are warehouses that house highly-sensitive computer servers and require a climate controlled environment.

"The buildings are nondescript because of security reasons. There is a lot of valuable equipment in these buildings," said Rob Roy, chief executive of Colocation Gateways, which occupies a 5,000-square-foot data center and hopes to replace it with a 55,000-square-foot center nearby later this year.

Phoenix-based Cole Companies also plans to build a 350,000-square-foot data center nearby.

These technology data centers, which mostly house computer servers for Internet service providers, phone card providers and networks for e-commerce businesses, are sprouting throughout the country -- creating a ring of fiber networks that are capable of channeling immense amounts of data from computer-to-computer at eye-popping speeds.

The concept of these data centers focuses around a cheaper and safer way to store computer servers, which are the hearts behind Internet businesses. If a business office is broken into and computers are stolen or damaged, the business need not be shut down if its servers are stored in a highly-secure off-campus site.

In addition, by storing the servers in a central location with other businesses, each business can have its server wired with fiber at a much lower cost than if its own office had to be wired.

The demand for fiber optic cabling to run Internet businesses is being driven by the growth of video streaming on the Web, among other technology advancements, Roy said. This requires the speed and power of broadband technology, which is enormously faster than a 56K dial-up modem still being used by most home computers.

"A 56K modem to a fiber line is like using a foot-scooter compared to a car," said Roy.

Other data center operators are also here or are opening divisions in the Las Vegas Valley.

Denver-based Relera Inc. plans to open a 10,000-square-foot building in North Las Vegas by the end of the month. Colo.com, a Brisbane, Calif.-based company, is operating a center at 7185 Pollock Dr. Electric Lightwave is moving into the first floor of a downtown office building.

Dallas mortgage banker Joe Caruso plans to turn a 115,000-square-foot West Harmon Road building once used as the MGM Grand personnel office into a data center.

Everett Ede, a broker for Western Equities in charge of leasing space in the Harmon building, said Santa Barbara-based Range Fire Integrated Networks will likely take up half of the center.

Marnell Corrao Associates, a major casino construction company, is scheduled to revamp the old MGM Grand office building for the data center, Western Equities broker Doug Schuster said.

Michael Dittmore, Range Fire chief executive, said his company and Western Equities are "95 percent" complete in agreeing on a contract.

Range Fire runs a fiber optic network in Santa Barbara that powers the Pacific Technology Center, which is a business incubator that offers guidance and services to start-up tech companies.

Sprint and Qwest Communications are going to wire the building with fiber optic cables, Ede said.

Sprint also has small data centers in its 19 Las Vegas offices that allow technology businesses to rent space for reselling Internet and phone services. XO Communications, formerly known as Nextlink, has similar arrangements in its facilities. The Greenspun family, owner of the Las Vegas Sun, owns a stake in XO's Las Vegas operation.

Some question if there is enough demand in Las Vegas for all these technology data centers.

One local telecommunication executive made an off-the-cuff comment on that issue, noting that some local data centers look as barren as they did a year ago when they opened.

Roy, whose Colocation Gateways operation opened Jan. 1, said problems for some data centers were probably related to last year's stock market slump and the resulting lack of venture capital.

"Las Vegas was just emerging as a tech city when the market crashed. In order for companies to expand, they have to (add services) to another city, and Vegas was just about to become that city," Roy said. "But the companies had to scale back their expansion plans."

California power problems may be the fire that will ignite that tech drive to Las Vegas, some local businesses say.

"California is becoming another market for Las Vegas data centers to market to, because Southern Nevada is a safe place to run backup (computer) servers," said Richard Fitzpatrick, president of the Internet Business Association of Nevada, a trade association. "California has mud slides, earthquakes and now a power problem."

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