Data Center Services - Cologix and Edge Networking

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Our latest HawkTalk is about living on the edge… or at least edge of network services. For this conversation our guest is Bill Fathers, the chairman and CEO of Cologix.

Edge Network Provisioning - International VS North America

When asked about the demand of the closer international markets, Bill noted that Canada is 60% of Cologix's business. The country is examining their backbone situation, among other things. It's strange because there's not much east-west backbone infrastructure in place currently. Most of the traffic gets routed through the U.S. right now. The notion of digital sovereignty has taken the country by storm.

So, submarine cables that natively land on their east and west coast is the new trend. Facilities that can act as cable landing sites, like Cologix's Vancouver operation, are at a premium. They're also sponsoring a lot of international carriers to get more local, driving traffic and competing in their peering markets: Australia, Singapore, Korea, Japan, as well as Scandinavian and European agencies. Chinese social media platforms are making huge inroads. It's estimated that they may become as much as a third of the colocation market in North America within the year.

We then got Bill’s thoughts on what U.S. markets companies are embracing.

Cologix has seen Columbus become a hotbed for hyperscale. They had two facilities in the area before building their bespoke hyperscale operation. In 18 months, they sold out their entire 32 megawatt capacity. This has triggered the need to build a 4th and 5th facility in the area, just to keep up with demand.

Minneapolis is also a strong market, geographically central with growing demand. But customers were always asking about gateways in core regions, so some additional expansion was required.

About 4 or 5 months ago, they acquired a Silicon Valley colocation that had 20 megawatts with planning permission for an expansion of 10 more. Ashburn was the other major request from major corporations and governments, so even with the huge number of providers already there, Cologix made a move. They grabbed the land adjacent to another providers facility and started building. They're pad-ready as of this month with 72 MWs. There's no way they could have afforded it in years past, but in 2020, Cologix doubled the size of their business. That's how profound the impact of recent events has been on data center services.

The Future of Data Center Services

Bill noted that even though he called out digital infrastructure investment as a major theme the last time he was on the show, he underestimated the tremendous speed and scale of such moves.

As for newer development, the Asia rollout over the last six months has overtaken North America and continues to grow. Europe has a severe lack of supply and a growing demand, so huge premiums are being paid on the infrastructure supply chain side.

Latin America is suddenly taking off. Stonepeak just announced the acquisition of a fiber and data center business in the region, as the growth boom starts to take hold.

In North America, the Biden infrastructure bill should impact things. Road, water, industry, power, and supply will finally catch up with the digital investments already being made. This means more viable sites, higher quality facilities, and a better cost of living all around the hot markets.

Cologix just published their first ESG roadmap, showing that 48% renewable energy is being consumed in their company. Investment partners are now requiring additional green clauses, including hitting certain renewable energy percentages, increasing efficiency, and otherwise reducing carbon impact and resource consumption. Bill wouldn’t have it any other way.