Turkey: East meets west
Turkey is commonly viewed as a border point were east meets west, making it a potentially attractive proposition.
Telehouse has already been in Turkey for two years through a partnership with Teknotel Telekomunikasyon. “Turkey has been identified as a place which will open up in the future,” says Michelle Reid, sales and marketing director at Telehouse Europe. “We’ve been there for quite some time and there’s demand from existing customers.”
Reid says internet adoption has further to go in Turkey than Russia, with users growing at a slower pace. “Data centre awareness is not quite embedded in the market,” she says, but adds that the country will act as a gateway to Asia in the future.
A common view is that the market has traditionally relied on one or two local carriers and needs to open up more locally. TCL’s emerging markets survey shows Turkey as having 25 data centres, only five behind Russia, but its forecast raised floor space is only about a fifth of that of Russia by the end of 2013 and Keith Breed, research director at TCL, points to a large number of relatively small providers. “It needs a large investment in a big space to reduce the price per metre squared,” he says.
But there is no doubt that Turkey is viewed among carriers and data centre providers alike as a significant opportunity. And as elsewhere, cloud services look set to be a key driver.
Giuseppe Valentino, head of marketing data and innovation at Telecom Italia Sparkle, says submarine cable subsidiary MedNautilus has acquired most of its Istanbul data centre’s customers in the last year, since the launch of the company’s IaaS cloud service platform.
“The business is bound to grow with the ongoing widening of our PaaS and SaaS offer,” says Valentino.
He says this will build on the data centre’s already “pretty rich ecosystem of value-added resellers, systems integrators and network access providers,” having established a good mix of corporate customers and international and domestic players like Turkcell Superonline that can benefit from TI Sparkle’s global IP backbone capabilities on top of data centre co-location services. “Key priorities for corporations during the next years will continue to be cost savings, data centre consolidation and energy efficiency,” says Valentino.
Valentino points out that Turkey is one of the fastest-growing economies, with the country seemingly open to foreign investment.
He says Istanbul is becoming a major financial centre and telecoms hub between Europe and Asia and attracting corporate customers seeking cloud services. Murat Erkan, general manager of Turkcell Superonline says: “Although the data centre market is a very new market, it is growing very fast and has a lot of potential.” Erkan continues that the number of data centres in Turkey is increasing every day. “The effort to consolidate public sector IT infrastructure and share resource management is creating a significant market,” he says.
Russia: Expanding eastwards
Russia has seen fresh moves that suggest its data centre activity is on the verge of taking off, with the entry of carrier-neutral data centres often a positive indication.
A case in point is Moscow carrier-neutral data centre IXcellerate, which has 1,000 square metres in operation after starting its first phase of data centre operations in December. The company’s ultimate goal is to have 6,200 square metres operational on its 15,000-square-metre campus over the coming years.
TeliaSonera International Carrier (TSIC) is known to be in the final stages of deploying a PoP in IXcellerate’s Moscow data centre, while IXcellerate chairman and CEO Guy Willner says three more major international carriers are on the verge of also establishing PoPs.
IXcellerate has also linked up with four Russian fibre providers, including Cirex and Mastertel. TSIC itself has just announced the availability of its own 100G pan-European network stretching from Moscow to Madrid. Such moves towards high-quality connectivity are frequently a key attraction for carriers to new data centre markets. “If there’s already fibre and good connectivity, then it’s one less thing to worry about,” says NTT Europe’s VP of product strategy Len Padilla, who says NTT is keeping an eye on potential local data centre opportunities.
Financial institutions are also increasingly demanding high-quality data centre space in Moscow, with Willner citing banks undergoing major changes and the Moscow Stock Exchange seeking Tier 1 status. Willner, who is also chairman and founder of a global alliance of carrier-neutral data centres known as the International Data Centre Group (IDC-G), cites Moscow as a “no-brainer” for data centre development, despite only currently having about a thousandth the data centre space of London: “It will become a big part of telecoms data networking and acts as a bridge between Europe and South-East Asia.”
Global data centre provider Telehouse clearly agrees with Willner’s positive outlook, having recently made its own move in Russia. The company opened a data centre last November in the Moscow data centre of carrier-neutral DataSpace, which describes itself as Eastern Europe’s first certified Tier 3 co-location facility. Telehouse highlights that Russia’s 65 million users make the country Europe’s second largest internet market, with its economy growing by 3-4% annually. The company also says the country’s data centre market rose 22% to RUB6.2 billion (€154.7 million) in 2012 and its cloud market is “growing aggressively”. Michelle Reid, sales and marketing director at Telehouse Europe, sees significant potential in quality Russian data centres. “The carrier-neutral concept is quite new over there and there’s a lack of higher-spec data centres,” she says.
The ‘Emerging Markets Data Centre 2013’ study forecasts that Russia’s data centre raised floor space will reach more than 54,000 square metres this year, roughly the same as the joint total in the 10 other Eastern European markets covered in the report. But Russia presents a number of challenges. Keith Breed, research director at TCL, points to relatively expensive rack space, with an average end-2013 forecast price of more than €1,300 per month; the highest in TCL’s survey. Mattias Fridstrom, vice president and head of technology at TSIC, says it previously decided against building its own Moscow data centre due to complications in the market and potential high costs, instead awaiting the entry of a carrier-neutral provider. David Hamner, CEO of Telehouse’s local partner DataSpace, says: “This is a very difficult market to enter. If you consider the fact that it’s the largest city in Europe but none of the western colocation operators have come until Telehouse recently came to DataSpace, it’s a good indication that this is a difficult place to set up business. We came prepared with US$300 million in finance, but it still took us a year longer than originally expected.”
South Africa: Gateway to Africa
IDC-G cites South Africa as another burgeoning data centre market, with carrier-neutral provider Teraco achieving significant success since opening its first data centre there over four years ago.
“In all of Africa, South Africa is the easiest country to do business in and test the water,” says Lex van Wyk, Teraco’s CEO. He believes the country has potential to act as a gateway to Africa and is “pretty much an untapped market” where Telkom and Neotel dominate.
“It’s all because of fibre, which is making it far more interesting,” says van Wyk, referring to major submarine cables like SEACOM, EASSy and WACS now landing on South Africa’s coast.
Van Wyk says Teraco’s approximate 10% share of the outsourced data centre market is a very positive result within five years of operation, with data centres in Johannesburg, Cape Town and Durban that total 5,300 square metres in size and Teraco planning further expansion in these areas.
The 3,800-square-metre Johannesburg site is by far Teraco’s largest and most connected due to its status as the country’s major commercial and financial market, with many financial institutions and other companies moving online. Van Wyk says power back-up through outsourcing is also one major need in South Africa, with electricity costs set to rise 50% in the next four years.
Teraco offers connectivity to major international and local carriers, mobile operators and fibre infrastructure providers. Van Wyk says Level 3 and BT are already Teraco clients, as well as Africa-based carrier Liquid Telecom. He adds that Teraco is presently talking to quite a few international carriers and is busy with contracts with three. Teraco further stregthened its position in March by announcing a connection to the Amsterdam Internet Exchange (AMS-IX), which interconnects more than 550 IP networks.
The connection is aimed at making it easier and faster for African ISPs to tap into global carrier networks. “This creates huge bandwidth cost savings [and] gives the smaller guys more chance to compete,” says van Wyk.
But he says there are significant barriers for any new potential carrier-neutral entrants into the data centre market, due to expensive bandwidth, the huge investment needed with large distances between big cities and Teraco’s established presence.
Nonetheless, van Wyk says “I don’t think it’s impossible. There are lots of eyes on Africa from Europe.”
