Datacentre Location: A Multiple Choice Question

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Also posted on: IT Infrastructure


You might be forgiven for thinking that the only place to be as a datacentre operator in Europe is in one of the current hotspots of London, Amsterdam or Frankfurt. Obviously, if you are running network and inter-connectivity hungry applications then being on top of the big interconnection points makes a lot of sense. But as we have been finding, there are operators out there choosing very different locations for logical and effective reasons.

The Network and Latency Driver

The large, network oriented, carrier neutral operators like Equinix, Telecity and Interxion have built out multiple datacentres in key locations like Amsterdam for its density of ISPs and Internet Exchange or, as in Equinix case, clustered around the transatlantic link surfacing in Slough to provide a trading hub for financial services.  The attractions are obvious for those players, but they come at a cost of higher real estate charges, problematic physical access, concerns over power capacity and heightened security threats. If you were in any doubt about the threat of terrorism, then the fact that the UK Government has categorised the Telehouse Docklands datacentre as the second highest risk of terrorist attack in the UK probably says it all.

Power Availability

Access to a plentiful, consistent power supply is a powerful consideration in locating datacentre facilities. In 2011 Google reported that its datacentres were continuously drawing around 260 million watts, enough to power 200,000 homes. Operators have taken different approaches to gaining a plentiful consistent supply. Increasingly the web-scale datacentres run by Amazon, Google, Facebook , EBay and Microsoft are looking at locations where off-grid solutions using the wind or the sun are most effective. Co-location and enterprise datacentre operators may not have the scale to make the case for such facilities yet, but finding a consistent and scalable source of power has led to some unusual locations that have reliable power sources like the nuclear bunkers used by The Bunker in the UK, or the old steel mill converted by Keystone Nap in Pennsylvania.

Energy Costs

Given that energy costs are the second or third largest expenditure item for datacentre operators, finding ways of keeping the costs down often leads to particular locations. Free-air cooling, access to cold water and geo-thermal heating are making Iceland a really interesting place to consider locating a datacentre as Datapipe and Verne Global have found. Similar claims can also be made for the Nordic countries, although the availability of reliable winds, a temperate climate, and access to cold water cheaply brings many northern European countries into the equation.

The Edge

We are starting to hear a lot more about datacentres being located at the “Edge”. Indeed the whole value proposition of US operator EdgeConnex is based on this premise. The idea of placing your data processing close to the action is not new. This is the basic premise of Content Distribution Networks. But the potential growth in storage, networking traffic and data manipulation that could be caused by the Internet of Things is getting people to focus on the need to reconsider their location strategies. Could we see more, smaller local or regional datacentres spring up to both minimise the impact on backbone networks and deal with purely local processing requirements? Time will tell.

Data Sovereignty

This feels like a debate that has just passed a tipping-point. With Apple announcing  new datacentres in Ireland and Denmark and AWS opening up in Germany it seems as though the concerns of Europeans has at last had an impact. New ways of ensuring that data resides in a specific jurisdiction whilst still making use of wider cloud facilities will likely benefit local datacentre operators offering country specific data sovereignty.

Government Support

A rich and varied array of incentives offered by Governments to attract and retain inward datacentre investment can sometimes sway decisions about where to locate. For some years datacentres have prospered in off-shore locations such as The Channel Islands, Gibraltar and Malta handling the processing requirements of the gaming industry. Ireland’s low corporate tax rates and investment incentives have undoubtedly contributed to the rapid development of the country as a prime datacentre locations. The Netherland’s favourable tax regime hasn’t hurt the country’s development as a prime datacentre location. However, Governments change and along with it regulatory frameworks and fiscal incentives, so it might be wise not to rely solely on these factors when deciding on a datacentre location.

A Local Agenda

So far we have looked at issues and alternatives that probably resonate most strongly with the larger regional and global operators. Yet there are large numbers of local operators with a single or very small number of datacentres, whose value propositions are based around specific localities or particular industry clusters. Whilst providing the “table stakes” security, energy efficiency and resiliency levels now demanded across the industry, their local customer focus and knowledge of a particular sector are valued by a range of customers. Now add in the flip-side of what we highlighted in the network and latency hungry segment, higher prices, difficult access, security and powers concern. If you are small or medium size enterprise in Northampton wanting to move your servers from under the stairs, or a local internet start-up, having a facility like Node4 round the corner is, and will continue to be, a real benefit.

In conclusion there are a lot of variables and factors to take into consideration when choosing an ideal site for a new datacentre. Let’s face it, not everyone needs the low latency and global interconnectivity offered by the Tier 1 carriers. Indeed the build out of carrier networks and the willingness of carriers to put points of presence into local facilities means that network costs and response times will be more than adequate for most businesses and applications. Indeed where you locate your datacentres may be as much about your market segmentation and value propositions as as energy and networking considerations. We will visit the topic of datacentre segmentation in our next blog post.

Image: Tim@SW2008

This post first appeared on the old Cassini Reviews website.