As undersea cables become strategic assets in the cloud wars, will data centers flourish where the cables emerge from the sea? The arrival of two major subsea cables in Virginia Beach has made the resort town a focal point for speculation about the power of cable landings in data center development.
Local officials hope that Virginia Beach can provide the state with a “second front” in the cloud wars, more than 200 miles south of the world’s largest concentration of data centers in Northern Virginia. Several modest data center projects have been announced in Virginia Beach, which hopes to create a colocation hub near the cable landing station for the MAREA and BRUSA cables.
But the biggest beneficiary of the undersea cables may be the Richmond area, where Facebook is building a $1 billion data center campus in Henrico County, just down the road from a major QTS Data Centers facility. Those companies have focused attention on the area as a destination for hyperscale data centers. Facebook is a major investor in the MAREA cable, along with Microsoft, and the new Richmond site provides easy access to trans-Atlantic data traffic.
Over The Top, and Over The Ocean
Undersea telecommunications cables are now strategic assets in the growth of hyperscale Internet companies, with companies like Google, Facebook, Microsoft and Amazon emerging as key investors. Last month Google became the first Internet company to announce an undersea cable project exclusively for its own use.
The MAREA project is a good example, showcasing how over-the-top (OTT) providers that deliver video over the Internet – a group that includes Google, Facebook, Apple and Microsoft – are investing heavily in infrastructure to support future growth.
“We are seeing the next generation of subsea deployments, which will support the next 20 years of growth as we experience an explosion in the amount of data that traverses the globe,” said Gil Santaliz, Founder and CEO of NJFX, which operates a colo facility at a cable landing station in New Jersey. “These new cables have a new financial model driven by the OTT’s with fewer carriers involved.”
Microsoft says its investment in MAREA was influenced by Superstorm Sandy and its 2012 disruption of subsea cables around Manhattan, which highlighted the need for cables to follow diverse routes for disaster recovery.
“For us, the storm brought to light a potential challenge in the consolidation of transatlantic cables that all landed in New York and New Jersey,” said Frank Rey, director of global network strategy for Microsoft’s Cloud Infrastructure and Operations.
Why Virginia Beach? Perhaps because it is due east of Boydton, a tiny town in Southern Virginia where Microsoft operates one of the world’s largest cloud computing campuses. Microsoft has invested $2 billion in data centers and servers in Boydton, where it has already built seven data centers and 1.1 million square feet of space, and is adding additional capacity.
“This is all about control,” said Hunter Newby, CEO of Newby Ventures, an investor in several colo projects at cable landings, including 1025 Connect on Long Island. “(Hyperscale operators) are building submarine cables because they need so much capacity.”
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As these cloud titans focus investment in cables and new routes, it has the potential to reshape how data flows across the ocean, onto the U.S. mainland, and into the cloud.
“There’s a very unique opportunity to do intelligent design in network architecture,” said Newby. “When someone’s looking for content from Europe, where are they going to fetch it? They’re going to fetch it from the closest possible point they can – where the colo hangs off the submarine cable. This makes so much sense.”
Optimizing For Data Centers
How will that flood of traffic rising out of the ocean shape the data center geography? Virginia Beach is a great place to examine this question. It’s a city of about 450,000 residents in the Hampton Roads area of Virginia, with an economy dominated by beach tourism and the large military community around the U.S. Navy port in nearby Norfolk.
The MAREA cable originates more than 4,000 miles away in Bilbao, Spain and can transmit up to 160 terabits of data per second across the ocean. That’s more than 16 million times faster than the average home internet connection, making it capable of streaming 71 million high-definition videos simultaneously.Cloud builders' investment in subsea cables has the potential to reshape how data flows across the ocean, onto the U.S. mainland, and into the cloud.Click To Tweet
In December, Virginia Beach slashed its tax rate on computers and data center equipment to $0.40 per $100 of assessed value, matching a reduced rate established in Henrico County last year. The city described the move as “one of many new initiatives Virginia Beach is embracing to welcome data centers to the city.”
“The world is taking notice of Virginia Beach, and we are prepared with the infrastructure, incentives and forward-thinking support to welcome big data users,” said Warren Harris, the Virginia Beach Economic Development Director. “These projects are creating a new technology port and provide another direct connection to the rest of the world. Being the first international cable landing location in the Mid-Atlantic is a game-changer.”
Officials from Virginia Beach and fiber provider Mid-Atlantic Broadband have been traveling extensively to promote the city as a data center destination, attending industry events in Hawaii and London.
There are several active data center initiatives in Virginia Beach:
- Globalinx Data Centers is building a carrier-neutral meet-me-point at a data center campus in close proximity to the Telxius Cable Landing Station (CLS) in Virginia Beach.
- Telefonica/Telxius, which is an investor in both the MAREA cable and the new BRUSA cable from Brazil to Virginia Beach, is building a 20,000 square foot data center on 3.5 acres of land in the Corporate Landing Business Park in Virginia Beach.
- Dutch company NextVN has announced plans to create a large data center park in Virginia Beach. The company is a developer that buys land and handles licensing, permitting, zoning and power and fiber infrastructure to prepare the parcels for data center tenants.
- Blockchain company BCause will create a bitcoin facility in an 84,000 square foot facility in Virginia Beach, located next a Dominion Energy substation. The city has approved an economic development grant of $500,000.
The development efforts are focused on Corporate Landing Business Park, a 325-acre, Class A, mixed-use park with ultra-high-speed network infrastructure, available fiber access hubs, and a cable landing station. The park has been approved for streamlined permitting processes and flexible business assistance programs.
Veteran observers of the state’s data center industry see potential for development in Virginia Beach, but say it’s still early days.
“The question is whether Virginia Beach will become a player,” said Kent Hill, Senior Manager of Economic Development at Dominion Virginia Power. “I think the jury is still out, but it’s an option for Virginia that we didn’t have before. We think Virginia Beach will bring residual opportunity, particularly sites that can route from there to Ashburn.”
“Virginia Beach will benefit if the submarine cables provide a demarcation point,” said Newby. “I believe there’s an opportunity to create a neutral meet-me-room.”
Globalinx Plants Its Flag
Greg Twitt agrees, and sees an interconnection facility as the logical starting point for a data center ecosystem in Virginia Beach. Twitt is the founder and President of Globalinx Data Centers, and knows the area well from his group’s ownership of a facility 25 miles away in Norfolk, which hosts an EdgeConneX data center.
“When it was announced that we were getting a subsea cable coming in from Telefonica, I was interested in developing a colocation facility at the cable landing,” said Twitt. “Location is really the most important thing. I think Virginia Beach is a logical stopoff point, particularly when you have a city that’s so pro-subsea development.
“We’ve had an enormous amount of interest,” Twitt added. “We’re talking to three or four possible anchor tenants.”
Globalinx is nearing completion on the first phase of a 10,750 square-feet Tier III data center facility on an 11.5-acre campus within Corporate Landing Park. Globalinx has outlined a three-phase plan that will expand its Virginia Beach campus to more than 150,000 square feet of colocation data center space offered with variable power densities.
“By building a carrier-neutral colocation facility in Corporate Landing Park, Globalinx is providing a platform essential for facilitating interconnections between subsea capacity and terrestrial fiber networks,” said Harris. “This further advances our goal of making Virginia Beach a truly ‘Digital Port’ city, and will help attract additional subsea projects to Virginia Beach for true diversity from the subsea cable systems in the New York-New Jersey region.”
“The city is fully supportive of creating an ecosystem that goes beyond data centers,” said Twitt. “They’re crucial to our development and totally supportive.”
Richmond: The Biggest Beneficiary?
In terms of data center development, the big winner from the MAREA cable has been Henrico County, a suburb of Richmond about 100 miles northwest of Virginia Beach. In October Facebook announced plans to invest $1 billion in a new data center campus in Sandston. The 970,000 square first phase of the data center is being built in the White Oak Technology Park, where QTS Data Centers already operates a huge campus.
The campus in Henrico County provides Facebook with easy access to trans-Atlantic data traffic coming from the MAREA cable. Facebook is a major investor in MAREA, which provides it with a particularly strong economic case for building in proximity to the cable landing.
Newby said the Richmond area benefits from “optical spacing” for fiber running between Virginia Beach and Ashburn, where Facebook also operates a cluster of data centers.
“The light needs to be regenerated,” said Newby. “Facebook found land next to the power. The fact that Facebook is in Henrico County is all you need to see. That’s where the big-ass data centers are going to go.”
That’s music to the ears of QTS, which was the early mover in Henrico County in 2010, buying a former semiconductor fab sitting on 210 acres of property, which the company has converted into a data center. QTS has been positioning the campus as a destination for hyperscale server farms.
“You would think we were geniuses,” jokes Tag Greason, Executive VP of Sales at QTS. “It’s a great opportunity to have Facebook in town. You have a $1 billion investment next door, and the cable is coming. Since that announcement, we can now measure a larger pipeline of prospective deals than we had before.”
QTS has been retooling its entire operation to focus on hyperscale opportunities, and just notched a huge win with a 24-megawatt deal with a cloud provider in Manassas. Newby believes those type of huge facilities could become more common in Henrico County.
“Richmond is popping,” said Newby. “More data centers will get built there. Power is cheap, and land’s cheaper than Ashburn. That submarine cable changed the entire game.”
The ambitions in Virginia Beach are more modest, for the moment. But Twitt believes the city has a future as a data center hub. “We don’t see this as another Ashburn,” he said. “But we’re really interested in getting our share of the action, and not having it bypass us completely.”
City officials see an opportunity to recast Virginia Beach’s identity. “MAREA is allowing us to become a digital port, not just a port city,” says Harris.