Common Ownership of Data Centers and Subsea Cables

Common Ownership of Data Centers and Subsea Cables

V.tal is a South American data center company that is working closely with the South American cable, Globenet, which connects New York to Brazil. An infrastructure fund owns both companies. The Globenet system is heavily used for low latency trading as it has one of the shortest paths to Fortaleza, Brazil. From Fortaleza the low latency trading networks that serve the financial industry (high frequency traders) go overland to the Brazilian stock exchange data center, B3, which is in within spitting distance of the Equinix SP4 facility. 

There is a growing trend for new data center companies to become involved in building or affiliated with subsea cables. This ensures that their new, often remote data centers have big bandwidth pipes into them. It is a tricky balance because a new high capacity cable cannot be successful just by connecting new, largely empty data centers. It is important for the cable to divide itself into several back haul paths so that its customers can reach all data centers of interest within a reasonable distance. Given that subsea cables often struggle to generate a good rate of return due to the wholesale market that they serve it might be natural for them to pair up with data center companies which generally earn excellent returns, but require excellent connectivity. 

The Globenet cable itself is quite old. Vintage 2001. But its Fortaleza cable landing station has a large number of occupants using it to interconnect and peer. The CLS is a valuable asset that could house new subsea cables. Furthermore, an obvious synergy would be to expand Globenet's Fortaleza CLS into a big data center using V.tal's expertise. The facility is only a few blocks from the Telxius CLS. And dark fibre is available between the two sites. That at least is what I would do, armchair quarterback that I am. 😀 Full article: https://lnkd.in/db95VQ49.