Bigger pipes, more applications, the need for storage, the rise of cloud services: All of this is contributing to a boom in the carrier data center opportunity. But building a data center is not just a question of installing some racks and calling it a day. There are several key legal and regulatory issues that can sink an unwitting operator.
Take, for instance, the fact that many customers have business plans that specifically anticipate sublicensing, so that issue should be addressed while the license agreement is being negotiated. Customers should not be permitted to assign or sublicense their rights or obligations under a data center agreement, or authorize any third party to use data center space without the provider’s express written consent.
Customers also move in and out of data centers on a regular basis, and their space requirements change over time. Accordingly, the provider must have the ability to “groom” the facility to maximize utilization of available space as customers come and go.
Then there are the regulatory considerations. If a data center offers capacity services (as opposed to unlit cabling), this could subject the operator to regulation as a common carrier under federal and state laws. Likewise, some of the activities conducted by customers in a data center could be considered intra-state or interstate telecommunications services, and be subject to regulation by the state utility commission or the FCC if offered to the public for a fee.
High speed Internet service providers, telecommunications carriers and interconnected VoIP service providers are subject to requirements of the Communications Assistance to Law Enforcement Act. CALEA is relevant to providers of data centers because the data center provides a location at which CALEA-compliant equipment may be installed, and that equipment must be accessible to law enforcement agencies.
Meanwhile, some data centers have been criticized as unwelcome neighbors in the cities where they are located, for reasons of noise, heat emission or the fact that neighborhood activists may prefer a building of that size be occupied by businesses that generate more local jobs. For these reasons, neighborhood opposition may appear in city council and planning board hearings if the facility requires a zoning variance or any other local approval.
These are but a few of the issues for operators as data centers become more and more of an important part of the communications landscape. For the full legal lowdown, click here to read the in-depth xchange article on the subject, penned by Andy Lipman and Chuck Rohe from the Bingham McCutchen law firm, or click the source link below.
