Did Terremark Deal Scuttle New Verizon Projects?

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The NAP of the Capital Region in Culpeper, Virginia is among the data center assets Verizon expects to acquire once it closes its acquisition of Terremark.

There's plenty of finger-pointing going on among local officials in the Buffalo area following Thursday's announcement that Verizon will not proceed with plans to build a proposed 900,000 square foot data center project in Somerset, N.Y. Some blamed delays in land acquisition, but there was also anger about the role played by a lawsuit from local resident Mary Ann Rizzo, who felt a proper environmental review was not conducted for the project.

Some of Verizon's public statements supported that narrative. "Between the extended time it would take to contest the lawsuit, the inability to close the sale of the property and other issues, our time frame for the start of construction and eventually serving our customers has already passed," the company said in a statement to local media.

Those "other issues" may loom larger than local controversies. The key development may have taken place Jan. 31, when Verizon announced its intention to pay $1.4 billion to acquire Terremark, a data center provider who operates more than 1 million square feet of facilities, including large data centers in Miami and Virginia.

The role of the Verizon deal was noted by Verizon Verizon Regional President James Gerace in an interview with The Buffalo News. "This project is done," Gerace said. "We're accommodating (our needs) with our current facilities." He said Verizon's immediate data center capacity needs "may be accommodated" by the Terremark acquisition.

Wyoming Project Also in Doubt?

Gerace told the paper that Verizon will not build a large data center in Laramie, Wyoming, where it has an option on 160 acres of land. Some industry watchers had speculated that Verizon was trying to play Wyoming and New York against one another to wrangle the best possible incentives. As of Friday, officials in Wyoming said they were still in discussions with Verizon, so there's no confirmation yet on the outcome of that site selection process.

Both the Buffalo and Laramie proposals involved Internet-scale data centers in secondary markets where cheap power and tax incentives were key ingredients in the selection process. Terremark's data centers are located primarily in major markets with abundant supply of connectivity and customers. Which direction represents Verizon's future data center footprint? The jury is out, but we know that Verizon's path to the cloud won't run through upstate New York.