This is Europe’s Hottest Emerging Data Center Market

Typically, when talking about the internet’s geography, people in various corners of the industry that collectively builds out the global network see any particular region around the world through a prism whose sides are the region’s few key cities where most networks converge and interconnect. New York and Ashburn in the Eastern US; Miami and Dallas in the American South; Singapore, Hong Kong, and Tokyo in Asia – those are all metros where for a number of reasons many network operators have chosen to link their networks, forming interconnection hubs that grow more attractive to their peers and other players in the ecosystem as more of them join. It’s a snowball effect.

In Europe, the hubs have traditionally been Frankfurt, London, Amsterdam, and Paris, or FLAP; and for decades this quartet has been sufficient to serve Europe and whatever non-European markets companies in Europe have wanted to reach. But today’s explosion of demand for digital content in Africa, Middle East, and Asia means European interconnection hubs now play a much bigger role. That change has created an opening for a new hub to emerge, and the fastest-emerging one today is Marseille. The big port city in the south of France that’s fought long and hard to shed its reputation as a criminal hot spot and build its image as a welcoming tourist destination on the Mediterranean has a huge geographic advantage over the other European hubs for companies that want to deliver digital services in the high-growth markets outside of Europe.

Submarine cable consortia – the telco cartels that control most intercontinental bandwidth – have known this for many years; cables that land in Marseille take advantage of the straight shot across the Mediterranean to multiple North African countries, but also east, via Alexandria, through the Suez Canal, along the Gulf of Suez, and across the Indian Ocean to Mumbai. Responding to the new demand, two new cables recently came online, laid roughly along the same route but reaching further into Asia, all the way to Singapore, Viet Nam, and Hong Kong. In addition to the biggest hubs, cables stretching from Marseille land along the way in places like Catania, Istanbul, Tripoli, Haifa, Djibouti City, Doha, Karachi, Penang, you get the idea.

interxion-marseille-cable-map

Today, most of the demand is driven by digital content. An office worker on a bus to work in Karachi expects to watch a soccer game on their phone the same way a college student in New York expects to watch a Kanye West video while sitting on a lawn in Central Park.

The demand is so urgent that Interxion, one of Europe’s largest data center providers, had to scramble to build a facility to house a network point of presence (POP) in Marseille for one of the two new cables. Operators of the AAE-1 cable wanted two POPs in the city immediately, but Interxion only had one. It had recently secured two large buildings in Marseille-Fos Port (the city’s main port) for expansion, but hadn’t yet started construction. The solution was to deploy pre-fabricated data center modules by Schneider Electric inside one of the buildings (an old port warehouse) and just enough cooling and backup power infrastructure outside to support the second POP, all within two months.

The data center module housing the AAE-1 POP inside Interxion’s otherwise empty warehouse in Marseille-Fos Port, June 2017

First Mover

Amsterdam-based Interxion is enjoying a first-mover advantage in Marseille. Its investment in 2014 to acquire a data center there from the French telco SFR is expected to pay dividends for years to come, painting the way to solidification of the company’s grip on the market that’s become more important than it’s ever been as a strategic interconnection point for connectivity between Europe, Africa, Middle East, and Asia. The data center, called MRS 1, was already an aggregation point for eight cables that landed in Marseille and elsewhere on the Côte d’Azur at the time, but the two new ones — AAE-1 (landing in Marseille) and SeaMeWe-5 (landing in nearby Toulon) — would be game-changers. Not only would they bring more bandwidth, they would dramatically shrink network latency on the route.

Now that the cables are live, roundtrip latency between Marseille and Singapore, for example, has gone from north of 200 milliseconds to about 130 milliseconds, according to Fabrice Coquio, Interxion France president. The effect of that latency drop on the market is what Interxion bet on when it bought MRS 1. “When you’ve got not only the pipe growing but also the latency dropping, then some applications – particularly from the cloud sector, digital media sector – can require to be positioned in a very specific data center, so that they can benefit from that latency effect and the capacity effect,” he said in an interview with Data Center Knowledge.

Interxion France president Fabrice Coquio displays trays of network cross-connects at MRS 1

In other words, if you control a data center that provides access to low-latency transcontinental networks, you have an asset where cloud and content giants – the likes of Google, Amazon, Facebook, and Microsoft – simply have to be. “Overnight almost, because of these two cables, Marseille moved from a telecom-transit city to a content city,” Coquio said.

Quickly growing demand in markets south and east of Europe combined with access to so many cables that connect Europe to those markets make Marseille a sought-after gateway and Interxion a gatekeeper. There was no other carrier-neutral data center provider in the city when the SFR facility changed hands, and whatever player may want to enter the market now will almost certainly have to go through Interxion to get to the networks.

“First-mover advantage is very big in the colocation industry, especially when you’re talking about a secondary market like Marseille,” Jonathan Hjembo, senior analyst at the telecommunications market research firm TeleGeography, said. “The ball is rolling in their (Interxion’s) favor. They have the ecosystem that everyone needs to interconnect with right now.”

Fastest-Growing Pipes

In recent years, bandwidth demand in North Africa, Middle East, and Asia (let’s call them NAMEA) has grown faster than in any other market. As a result, Marseille has become the fastest-growing market in Europe in terms of international network bandwidth, Hjembo said in an interview with Data Center Knowledge. “Marseille is there to serve those markets,” he said.

Most traffic to and from the FLAP metros goes through Marseille to reach NAMEA countries, and since 2013, international bandwidth in the French city has grown at a compound annual rate of 60 percent by TeleGeography’s estimate. That’s total bandwidth on international cables that land in the city. “None of the other big hubs are close to that,” Hjembo said. “You combine demand from three separate sub-regions converging on one point in Europe, [and] that certainly explains a lot of the demand there.”

There are a couple of alternative locations for linking Europe to NAMEA, but neither has seen the kind of growth Marseille has. Trying to hedge its bets across the region, the internet exchange DE-CIX, for example, deployed exchange points in Istanbul and Palermo (in addition to Marseille). It’s been trying to get Istanbul to grow “for ages” but with little success, Njembo said, due in large part to Turkey’s political instability. Palermo doesn’t necessarily lose to Marseille in terms of location, and many submarine cables land there, but Sicily’s capital just hasn’t seen the kind of growth Marseille has, with international internet bandwidth in Palermo barely placing it on the list of top 25 hubs in Europe.

The Edge Effect

Not only does a Google or an Amazon want a network POP in Europe that’s the shortest possible distance from Singapore, it now also wants to store tons of content near that POP. To ensure the best possible user experience for people in NAMEA, content and cloud providers try to cache data as close to the top metros they’re targeting as possible, Njembo said. These companies wanting to store content closer to the edges of their networks (a network edge is simply where your network ends, handing off traffic to another network that takes it to its final destination) potentially translates into big, lucrative data center leases in Marseille for Interxion.

Adding content to the mix of clients means you’re no longer just selling one rack to carrier A or two racks to carrier B, Coquio said. “When you’ve got the big guys like Amazon, Google, and Microsoft, then you’re talking megawatts of IT.” MRS 1, where half of the building’s capacity is still occupied by SFR (now as a tenant), and the other half is almost fully occupied by Interxion’s various colocation customers (including all the cloud and content giants), will not absorb the demand Interxion expects to come down the pipeline, which is why the company recently acquired two massive buildings on the coast.

A U-Boat Bunker for YouTube Videos

While Interxion’s business in Marseille has revolved around MRS 1 – and the amount of networks interconnecting there will in all likelihood ensure that continues to be the case – a future facility in the works about 3 kilometers away, in Marseille-Fos Port, will surely be worthy of crown-jewel status within its portfolio.

The company is converting a submarine bunker built by the Germans during World War II into a data center. The two-story concrete structure was designed to hold 20 U-boats. The Germans never got to finish and use what they expected would become their main submarine base on the Mediterranean (perhaps for the same reason so many submarine cables land in the area); German forces in Marseille capitulated in August 1944 after a period of heavy bombardment by the Americans and an Allied invasion from the shore, but they managed to build a fortress in the port.

Northeastern wall of the submarine bunker, June 2017

Germans developed (and perfected) U-boat bunkers during the First World War to protect their subs from aerial bombs. Over the course of the war, as bombs grew larger, bunker designs got increasingly more robust. They already had some advanced designs when WWII started, but as the war progressed, and as Allies’ bombs grew bigger, the concrete bunker roofs got thicker. The U-boat garage in Marseille, whose roof is nearly 6 meters thick, is one of the later designs, created after numerous 12,000-pound Tallboy and 22,000-pound Grand Slam bunker-buster bombs dropped by the Allies successfully penetrated some of the earlier shelters, according to U-Boat Aces, a site specializing in German U-boat history. If you’re not sure a 6-meter-thick slab of reinforced concrete can withstand a 22,000-pound bomb, consider that this was not your typical reinforcement. Because there was no steel available at the end of the war, the builders would simply disassemble a nearby railroad and use the rails for bunker construction, Coquio said.

Inside the former submarine base, June 2017

Inside the bunker, June 2017

MRS 3, the name of the server farm that will occupy the structure, will have about 80,000 square feet of data center space. Together with MRS 2, a data center Interxion is developing in a 1950s warehouse across the street (the one where Schneider built the urgently needed cable POP), the site will have 80MW of power capacity total, with the company expecting to spend €180 million to develop it. That 80MW will be delivered over two 40MW feeds for redundancy, according to a company presentation.

Interxion is working with an architect to preserve the historic building’s original structure, while adding modern elements, such as a garden and a bar, both on the roof, with spectacular views of the city and the Mediterranean to entertain clients. There will also be offices on the roof, covered by a futuristically-shaped structure that makes the building look like a cross between a submarine and a spaceship.

The MRS 3 design vision: southwest facade (top), inner courtyard wall with a vertical garden (middle), northeast facade

An open-air space stretches along the main structure, walled off from the outside. The company plans to keep it as a courtyard, featuring a vertical garden on the inner side of the wall built to protect the garage from attack from the sea.

MRS 2 and 3 will be linked to MRS 1 by Interxion’s own fiber network, creating the campus effect, where companies that keep their servers in Marseille-Fos Port can easily interconnect with any of the 100 or so networks at MRS 1.

The campus will be close to if not on par in strategic importance with the company’s data centers in FLAP markets and make Interxion part of any conversation about US and European companies delivering digital services to countries in North Africa, Middle East, and Asia, or vice versa. “It’s now quicker to reach Tunis, Egypt, or Morocco than even reaching Paris,” Coquio said. “This is unique. It’s a pure geographical advantage.”

The campus will also give France an outsize presence on the internet’s map. Other Western European countries each have only one major data center and network hub (London in the UK, Frankfurt in Germany, Madrid in Spain), while France will have two, Coquio said. “Now there’s going to be a major combination between Paris and Marseille.”

Coquio walks in the courtyard of the former submarine base, June 2017

But as much as Coquio hopes to disrupt the acronym that neatly forms the familiar word FLAP by inserting an “M” (as in FLAMP), Marseille is not likely to become as big a data center market as the FLAP cities are. It’s hot today because of the demand for international connectivity, but it doesn’t have the level of enterprise presence that makes London and Paris such big data center markets. Cloud and content are huge data center users, but so are banks, insurance companies, manufacturers, and governments.

Hjembo sees Marseille becoming a similar market to Stockholm, which only has enough room for two or three major players. Marseille is hot today, and there’s probably room for another big player there besides Interxion, he said, but at some point the growth will wane and stabilize.