The Canadian data center market has been getting more and more attention lately, especially as more and more internet infrastructure investments are focused at the edge, outside the handful of core nodes that have traditionally dominated. One such market is that of Montreal, the home of ROOT Data Center. With us today to talk about the data center business up north is ROOT’s CEO AJ Byers. Prior to taking the helm at ROOT, AJ led Black Iron Data until its sale to Rogers, when he became the division’s president.
TR: How did ROOT Data Center get started and how do you approach the market?
AJB: Jason van Gaal started the company in the Montreal area with a small five-megawatt center. Then after we won a large deal with one of the largest cloud service providers in the world, we built a 175,000-square-foot, 50-megawatt data center, which is one of the largest data centers in Canada today. I know that's not massive in the scale of US data centers, but for Canada, it is one of the largest data centers in the country. ROOT is really about having the most efficient design, the most efficient power utilization, and the most cost effective power region. We have developed a data center design and construction methodology that really works for large scale rapid deployment. We have a very modular design that lets us deploy 3-5MW data centers for customers in 90-120 days.
TR: What type of customers have you chosen to focus on?
AJB: There is a major shift ongoing from businesses and enterprises purchasing their own colocation to migrating to the cloud. I think the same transition began earlier in the U.S., but in Canada it began about three years ago, and so we're seeing some of the largest enterprises and the government looking to cloud as a kind of a “cloud-first” strategy. So the local enterprise-focused data center wasn't really the thing anymore, and what ROOT wants to do is focus on wholesale. We saw the big demand in Canada centered around cloud service providers, none of whom were really even in Canada up until the last couple of years. Our core target market is large technology providers coming to Canada who want to service enterprises, large businesses, and government.
TR: So what was attractive about Montreal and Quebec? What does the market look like there today?
AJB: The reason that ROOT is in Montreal is because the province of Quebec has the lowest power prices in Canada and some of the lowest power prices of all of North America at below five cents per kilowatt hour. In addition it utilizes environmentally friendly electricity, and the large cloud providers are looking for 100% environmentally sustainable power.
Up until the last few years, I'd say that Quebec was a somewhat depressed market compared with the rest of Canada. But now Montreal is setting itself up globally to be the destination in Canada to get artificial intelligence, gaming, and post-production technology and infrastructure. They are giving huge credits to companies coming into the market in all of those areas including the data center business. That has brought Montreal back up to, I'd say, the same level as the rest of Canada right now.
TR: What types of environmentally friendly power are available and why is it cheaper in Quebec?
AJB: It’s all hydro electricity and there’s tons of it available to us. What happened was that many, many years ago they just invested heavily in hydro electricity rather than nuclear or other technologies and have been able to maintain utilization of those hydro electric investments. It was a very smart decision, and those investments are producing a significant amount power and are going to last for another 50 years, 75 years. They do sell a lot of power in the northeastern US. They have traditionally not sold power to Ontario, but Ontario is now looking at actually buying hydroelectricity from Quebec as well.
TR: What type of cooling do you use?
AJB: Because of the cool temperatures in Montreal, we can get free air cooling for our facilities 92% of the year. We only have to turn on traditional air conditioning 8% of the hours in a year. We use a free air transfer technology, KyotoCooling, which is a large heat transfer wheel. Hot air flows through that wheel as it spins. The outside air then cools down the wheel and then it keeps spinning in rotation. So it's strictly a massive air changer like you'd have in your home, but using a heat transfer wheel that's made from enough aluminum to cover two football fields. And that gives us and our customers a PUE of 1.17, which rivals some of the most energy efficient data centers that are out there today.
TR: How big of a boost does having environmentally friendly energy translate into when it comes to demand for colo?
AJB: Google, Microsoft, Softlayer and Amazon have all chosen to deploy in Quebec as their primary deployment location. And only one of those companies has also deployed in Canada outside of Quebec, in Ontario for proximity reasons.
TR: Do you have plans to expand your model into other cities? What other markets might be attractive to you? Should we expect to see you building out in Toronto as well?
AJB: We actually don't think Toronto is a super attractive market due to the high electricity cost. We do think that the Ottawa market and the Vancouver market are both interesting markets in Canada. And then I'd say globally, what we would look at is a Tier 2, low-cost electricity market in what I would call a cloud service provider, Tier-2 market strategy. Canada isn't the first country they went to. It was probably country number six, or eight, or ten. We do believe cloud service providers will go into other Tier 2 markets around the world. And we would like to be the de facto data center provider for cloud service providers in those other global Tier-2 markets.
TR: Ottawa isn't too far from Toronto and doesn’t seem like it would be a better market in terms of power pricing, so what makes it potentially attractive?
AJB: While Ottawa's not better from a power pricing perspective, there’s a unique requirement in Ottawa from a customer perspective: the federal government. There's a need for data centers near the federal government for certain implementations. The federal government has also made a decision to host two large facilities in the Montreal region, and we are certainly looking at being a part of that project as well.
TR: What kind of global Tier 2 markets are you looking at, and when might we see you expand beyond Montreal?
AJB: One example would be Spain. It’s not one of the main European markets, but there's still a huge customer base. And with all of the data and residency requirements around the world, what we're seeing is the need for these cloud service providers to almost be in every country. I would say in the calendar year 2017 we will just be building in Quebec. In 2018 we might be looking at another project. Because of our rapid deployment capabilities, we could make a decision in March and have it deployed by the end of the summer.
TR: How long would it take you to build out in a new market, and how would you go about it?
AJB: Our preferred way is to retrofit existing large facilities. Typically, if we can find brown-field capacity with some degree of power, we can deploy in 120 days. In our current 175,000 square foot facility, we closed our deal with our customer in December. We signed the lease for the facility the following week, and by mid-February they were installing in the building. However, beside our smaller site we are looking at doing a green field build-out, which is a seven to eight-month project.
TR: Thank you for talking with Telecom Ramblings!
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