10 things we learned at Capacity CALA

One of the main conclusions from Capacity CALA was that the data centre power crunch, particularly for green power, is much less pronounced in the Caribbean and Latin America compared to other markets.

Several countries were singled out in this regard. Costa Rica and Panama both have abundant green power available, and Brazil also combines lots of renewable energy (its 85% renewable power share massively pushes up the overall green share of power in Latin America) with a fully integrated grid. This avoids the power distribution issues seen in countries like the United States – although power transmission costs can be a hefty share of opex spend for Brazilian projects.

Despite these advantages, data centre capacity and use in the region is currently low. To take an example, Australia and its 30 million people has twice the data centre capacity of the entirety of Latin America. All this makes for a market with strong potential, with several speakers predicting imminent hyperscaler involvement in building new facilities.

Colombia is a big, advanced and strategically located economy, and its importance fully justified a Capacity CALA panel dedicated to the country’s connectivity market.

In this panel, delegates heard why Colombia is likely on the verge of some chunky connectivity growth in the coming years. On the data centre side, the capital Bogotá is a strong location for facilities thanks to its cold climate, and the power side is promising, too – there is likely to be nearly a third more solar and wind power generated in Colombia by 2028.

There were two other advantages highlighted in the panel. Barranquilla on the Pacific coast is a promising location for subsea landings, and Colombia’s population is widely distributed across several economically powerful areas – only 13% of Colombians live in Bogota. These and other factors have helped drive investment, including $7bn in state funding for 5G deployment and further activity from Odata, KKR and T-Mobile.

Another country highlighted by panelists as a potential regional hub is Panama. The country is home to landing stations for six submarine cable systems offering both intercontinental and regional connections (with three more planned before 2026). It is also seeing large-scale data centre construction such as the Sparkle's Panama Digital Gateway, a green data centre that offers an connection to the various subsea projects coming into Panama, also serving as the Panamanian arrival point for the Google/Sparkle Curie cable connecting California to Chile.

Its position as a connectivity hub is also leading to large-scale data centre construction. Sparkle launched the Panama Digital Gateway, a green data centre that also offers on open connection to the various subsea projects coming into Panama, also serving as the Panamanian arrival point for the Google/Sparkle Curie cable connecting California to Chile.

The Panama discussion at Capacity CALA focused on the data centre side. With relatively small distances between the Central American countries and the lack of large data centre facilities, Panama's subsea activity makes it a strong contender for future hyperscale-level data centres in Central America.

Cable resilience and lifespan is important for an island region like the Caribbean, and a panel dedicated to end of life planning for cables delved into this matter.

One consensus was that the 25-year rule – the recommended lifespan of a subsea cable before it needs to be replaced – is not as hard and fast as is often assumed. In fact, this number should be viewed as more of a warranty than a technical cut-off point.

This is on top of the improvement in cable technology and materials, particularly given that unrepeatered systems, useful in the Caribbean for short cable hops between islands, have a much longer life than systems using repeaters.

This could all transform infrastructure planning in the region, where it can be extremely hard to secure funding, state or private, for systems connecting smaller territories and islands.

However, this disconnect between the quoted 25-year rule and the actual performance of cables past this date affects government involvement in cable funding – 25 years pass by, the cables are still working, so governments do not fund new ones even if they are necessary for route diversity and network resilience.

Alongside the political reality of election cycles and headline-chasing, this means getting governments involved in long-term telecoms infrastructure funding can be a difficult ask.

The problem is that government involvement in cable funding is vital, especially in the Caribbean. As a region of islands, some of which have very small populations, making the private case for cable funding is not easy, as in many cases the investment return timeline outlasts the actual life of the cable. Squaring this circle, delegates heard, is a big challenge for the industry.

This is not one you hear much about – but it is important all the same.

Cable cuts and outages are a constant threat for global connectivity performance. With repairs expensive and difficult, it is better where possible to minimise the risk in the first place (although the risk never goes away).

One vital part of this highlighted at Capacity CALA is fishing outreach. Fishing causes around 70% of cable cuts worldwide, and panellists discussed the importance of regular communication with fishing companies to avoid this happening.

This is not something that has to be done just once. One example given was if a fishing crew knows where to avoid a cable, but they then retire and a new skipper takes the helm, this knowledge is not always handed over. This is one example of the fact that when it comes to communication resilience, just a bit of talking and community outreach can save a lot of time, money, and stress.

One fact often overlooked by the rest of the world is that many territories in the Caribbean are legally part of other countries - to take an example, France's longest land border is with Brazil (via the Brazil-French Guyana frontier).

Panellists were keen to talk about the implications of this for outside funding, particularly from the EU. Subsea projects in the Caribbean are taking place thanks to funding sources like the Connecting Europe Facility program, one being the CELIA Caribbean European Territories Cable project delivered by Orange and Setar to connect Martinique and Aruba. Along the same lines, Puerto Rico’s status means the territory is eligible for BEAD funding.

You will hear some variant of ‘How can we use AI to actually make money’ at every industry event (see previous event roundups to get the idea), and Capacity CALA was no exception.

This time, the AI use cases put forward focused on billing and proposal designs. Given the turnaround speed for quotes expected by buyers, it is no longer possible to take weeks to respond to basic queries, and AI development is helping chop this turnaround time down. Infinera speakers, for example, shared their experience of using AI to deliver faster system designs when quoting for projects, and Seaborn has deployed the technology to monitor and automate SLA notifications.

But there are still big questions being asked about AI economics. As one panellist put it, “Who is making money from AI other than Nvidia?”

Given the Caribbean in particular contains a large number of administratively separate countries and territories, regulatory harmony is an obvious issue, and the matter took up considerable stagetime at Capacity CALA. 2024 has seen promising dialogue at leadership level between Caribbean countries, and panellists were united in the belief that this needs to extend to regulatory frictions being removed if the region's digital transformation is to take off.

One example given was data sovereignty. With the case for basing large DCs in multiple smaller countries hard to make, the obvious solution is for one large facility to serve more than one country - but there has to be an element of unified data protection regulation for this to happen.

Finally, here is an interesting mathematical point raised by a panellist. Cost of capital and higher interest rates are a headache for project funding. But if demand is growing at, say, 20% per year and interest rates are at 5% or higher, panellists put to the audience, to what extent does this increased cost of capital harm the case for investment?

 

Capacity CALA will return in 2025- in the meantime, you can see some event highlights on the website.