New Zealand as a global datacentre hub

With the plug pulled on Pacific Fibre, has the opportunity for NZ to become a prime location for global datacentres gone?

The demise of the Pacific Fibre project, which would have seen a second international cable built between Australia, New Zealand and the US, doesn’t necessarily spell the end of the country hosting overseas data.

New Zealand still has unique advantages as a location for very large global datacentres, according to consultant and entrepreneur John Humphrey, who was one of the founders and former CTO of Pacific Fibre.

New Zealand has stable politics and a supportive government. It has a skilled workforce, low crime rates and a temperate climate, he says. There is also relatively low cost power with a high percentage of renewable sources, such as hydro and wind, and there is the possibility of a dedicated geothermal power station. However, connectivity to the rest of the world is a challenge.

“With [Pacific Fibre] failing, of course, New Zealand’s attraction as a large datacentre location has diminished significantly,” he says.

Nevertheless, the datacentre providers seem open to the idea of welcoming global customers to our shores. Last year, IBM opened a $80 million datacentre south of Auckland, and Fujitsu New Zealand had $80 million in funding for two new datacentres approved by Fujitsu Australia, although these have not been built yet.

“Our plans to build datacentres in New Zealand have not changed, however the timing will be dependent on securing anchor tenants for these facilities,” says Jo Healey, MD Fujitsu New Zealand.

Hewlett Packard abandoned plans to build a $60 million datacentre at Tuakau, in the Counties-Manukau region, and instead announced plans to replace the Tuakau datacentre development with a refreshment of an existing Auckland datacentre, plus a review of locations for an additional site. Computerworld sought an update on these plans but HP declined to comment.

Local demand

Paul Douglas, business manager of integrated technology services at IBM New Zealand, says there is a future for New Zealand as a location for data farms and says he was disappointed to see Pacific Fibre ditch its plans.

“This is a simplistic description, but with only one piece of string between ourselves and Australia, and only one piece of string to the US – if I were an international client I’d be a little bit resistant to put my eggs in that basket. So I do think that will adversely impact our ability to execute that strategy.”

But if someone else built that second cable it could still be possible, he says.

The primary value proposition for New Zealand is around green power, as opposed to powering datacentres with energy produced from polluting sources, Douglas says.

IBM built the South Auckland datacentre to meet demand from local customers and is still seeing a strong interest from the local market, he says.

“We have taken a lot of clients around for tours [of the datacentre]. We have got a lot of proposals with clients and a lot of clients moving into the datacentre.”

There are also “a couple of international customers” in the datacentre, he says.

New Zealand well-positioned

Vocus, which acquired Maxnet in May this year, has always believed in the opportunity for New Zealand as a strong option for datacentre outsourcing – with or without the Pacific Fibre, says Vocus CEO James Spenceley.

“The cost and source of power will become more and more critical in the coming years and this positions New Zealand well – and is the reason we are investing in New Zealand,” Spenceley says.

Maxnet also has some international customers which are using its datacentre. “We have had significant sales success with companies that require spreading their content around the globe,” says Spenceley.

“Additionally, we have seen increased sales activity from Australia putting equipment into New Zealand. In fact, the day we announced the acquisition of Maxnet, we had our first orders for Auckland co-location from our Australian customers.”

Data sovereignty issues

“Along with high redundancy and security, many customers want to know they have physical access to their data should they want to come into the datacentre,” says Spenceley.

IBM’s Douglas says that the businesses that IBM deals with have always been aware of the risks and concerns around data sovereignty. Computerworld asked if the recent Megaupload affair has had any implications on customers’ perception of data sovereignty.

“To be honest with you, no,” Douglas says. “It [the Dotcom episode] has been an example but I don’t think it has created any new awareness.”

Another customer concern is power consumption, continues Spenceley.

“Businesses are looking at greener technology solutions, and our two New Zealand datacentres are powered by 100 percent renewable energy. This is attractive to Australian businesses, which are subject to the new carbon tax law and thus may be looking to reduce their carbon footprint.”

Humphrey too, points out the advantages New Zealand has over Australia as a location for datacentres – in addition to lower wages here, Australia’s carbon intensive electricity generation is forecasted to be up to five times the New Zealand cost, he says.

Tomorrow Ulrika Hedquist asks users about the maturity of local cloud offerings.

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