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MCI Inc. announced that it will be offering its users managed-storage services on an "on-demand" basis, meaning that beyond a minimum monthly requirement, users will only be charged based on what they use.

"I don't really care how much you allocate to a given server," said Rick Dyer, director of hosting product management for MCI. "I'm billing you in total based on the sum of all the storage you have on the servers. And the more storage you have, the cheaper it will be."

He said the minimum requirement of 50 gigabytes (GB) was in place to cover "fixed costs in terms of how we deliver this service, including infrastructure at the network level."

Meanwhile, it's storage from startup 3ParData Inc. and software from another startup, AppIQ Inc, that make the necessary provisioning for the "utility" pricing model possible. Competitors such as AT&T, SBC and Verizon Communications almost exclusively use storage from EMC.

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"What we liked about 3Par was that we were able to virtualize the way we present LUNs to our customers and, on the back end, change what disks are associated with which LUNs on the fly," said Dyer.

With most managed-storage services, customers have to request that a certain amount of storage is provisioned for them and pay for it, regardless of the amount of storage they actually use.

MCI's program "isn't like your electric bill, where if you shut off your power, they would send you a bill for zero usage," said Adam Couture, senior analyst with the Gartner Group. "But it's a little closer to a true utility model."

With managed services, Couture said, the problem is that "there's usually only one class of storage. The hosting company doesn't want to build lots of infrastructure, so they use fabric-attached high-end storage. If you're a NAS customer who doesn't need Symmetrix, you're still paying for the FC storage. That's been one of the problems."

According to Couture, MCI's use of storage and software from startups, then, could be a step toward even more bang for the managed-storage buck.

"The thing I think you're going to see is the ability with products like 3Par and other new arrays that let you mix and match iSCSI and FC disks within same box, which will lead to a lot more options for these service providers in the future," Couture said. "They're going to be able to deliver different categories of storage and it won't be one size fits all."

In general, according to Couture, the use of managed services -- which already rose and fell once with the tech bubble -- looks to be making a comeback.

"In terms of the 'hype cycle', early 2000 was the height of unrealistic expectations for managed services like this," Couture said. "Then it fell in late 2000 and 2001 to a trough of disillusionment. Now, it appears to be back on its way up again, but with more realistic expectations."

According to Couture, one of the biggest reasons this particular bubble burst was because of impractical pricing. "When these companies came out with these services the first time, they were really overpriced," he said. "The economics are working better now. The cost of storage has gone down and the service provider model is realistic today."

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