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.

Click map to enlarge (Source: Interxion)

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 (Photo: Yevgeniy Sverdlik)

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 (Photo: Yevgeniy Sverdlik)

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.