Ireland hoping to use the cold to its economic advantage

IRELAND and Iceland are seeking to fuel their hard-hit economies and exploit their position on the western edge of Europe with new data centres to be connected via a new, $300 million (€223m) transatlantic telecoms cable by 2013.

Taoiseach Enda Kenny unveiled the project — which Ireland hopes will help in its ambition in becoming a global hub for cloud computing — on Thursday at Dublin Castle.

“This will give great connectivity around the whole country, which is vitally important for attracting high-tech investment in the future,” Irish government spokesman Tom McLoughlin said.

Demand for remote data centres is increasing, boosted by the rising trend of so-called cloud computing, where information is stored and processed at massive remote data centres.

Ireland’s temperate climate suits the centres, which require huge amounts of power to run and to prevent from overheating.

Iceland, located between North America and northern Europe, and recovering from its own economic crisis, hopes the new, larger cable will help it to benefit from its renewable hydro and geothermal energy resources for data centres.

Google is building a data centre in Dublin and Microsoft already has one in the city.

The centres would bring much-needed investments and new jobs to the country, which fell victim to a severe recession after a property crash and bank sector meltdown.

US-based startup Emerald Networks on Thursday joined a race to build the first new transatlantic telecommunication cable since 2003, linking Ireland and Iceland to North America.

Two other transatlantic projects, Hibernian Express and Wasace, are also in the works, but using different routes.

The company has raised the first $5m from the Welcome Trust and has appointed investment bank Jefferies & Co to complete the $300m fundraising.

“We are very confident that in the current economy we are going to make it,” Ray Sembler, chief executive of Emerald Networks, told Reuters in an interview.

Emerald seeks to raise $20-$25m of equity this year, which would be enough to start the project, Sembler said, while in the first half of 2012 it aims to raise at first some $100m more in equity and then $150m in debt.

It has picked a unit of US firm Tyco to supply the cable and install it.

As existing cables in the Atlantic are aging, Emerald is seeking to first grab a share of their data traffic and then focus on growing through serving data centres.

Research firm Telegeography sees demand for transatlantic capacity increasing nearly nine-fold between 2010 and 2017, but it says current capacity is not being fully used.

“Less than 20% of potential capacity is in service today ... (the) likelihood of exhaustion is a far-off point,” said Alan Mauldin, analyst at Telegeography.

Mauldin says the opportunity for Emerald lies in linking new locations, like Iceland, with a fast connection.

Sembler said a few dozen Forbes 500 companies have already studied setting up a data centre in Iceland.

One of the first global players to move there has been Norway’s Opera Software, maker of world’s most-used mobile browser, which opened its Iceland data centre last year.

Trygve Jarholt, director of hosting at Opera, said so far the few cables to Iceland have been enough.

“A new cable is always welcome ... more capacity means more room for growth,” he said.