• Driven by AI, hyperscale datacentre capacity is set to triple by 2029
• It’s a global opportunity and NTT is one of the network operators looking to play a major role 
• It will soon have European datacentres in the ‘FLAP’ Tier 1 markets in Europe
• Another set of technologies – yet more acronyms
• The sector is booming but not all players will be winners

The global datacentre market is booming and, with so many players in intense competition to provide network and datacentre services to enterprises all over the world, the sector is on track to boom very loudly indeed for at least the next six to eight years. The potential of such an enormous market is attracting the determined attention of telcos (and others) in much the same way the beguiling waft of nepetalactone released from a sprig of the catmint plant drives masses of mixed moggies into olfactory ecstasy. They all want a sniff and to go with the flow.

The latest network operator to announce an expansion of its datacentre portfolio is NTT, via its NTT Ltd subsidiary – more on those plans later. 

In essence, a datacentre is a facility providing access to data services and applications via complex network, computing, and storage infrastructure. They are designed, built, maintained and managed according to agreed industry standards that help ensure data is held under conditions of security that are concomitant with the need for the data to be quickly and easily available.

There are four basic datacentre models; onsite/enterprise, co-located, edge and hyperscale – and to be defined as hyperscale – a facility should provide at least 40 MW (megawatts) of capacity counts. Currently, the focus is very much on the increasing importance and power of hyperscale datacentres. These are massive business-critical facilities designed to support robust scalable apps and are traditionally associated with so-called “Big Dog” data producing and manipulating companies, such as Amazon, IBM, Meta, Google and their ilk, whose power and influence is now being further bolstered by AI.

In terms of power usage they are very much more effective than any other type of datacentre and are also very agile, having the capability to scale up or scale down to accommodate the dynamic data loads they carry and service at any time. This is done by adding or subtracting compute power as needed, together with the ability to scale out to the network edge as required. 

As a rough rule of thumb, a hyperscale datacentre refers to a custom-engineered facility that houses at least 5,000 servers in an area of 10,000 square feet or more, whose sheer size alone provides great economies of scale and confers the ability easily to outperform any enterprise datacentre, anywhere. Another distinguishing feature is that they have network connections of at least 40 Gbit/s to manage the vast volumes of data they handle. And hyperscale datacentres do continue to get bigger and bigger.

According to Synergy Research Group of Reno, Nevada, the average capacity of those that will come on stream between now and 2029 will be at least double, and could easily be triple, that of current operational hyperscale datacentres not least because of the emergence and proliferation of generational AI, which requires ever more powerful data handling facilities. Meanwhile, the capacity of some existing datacentres could be retrofitted with new technologies to extend their capabilities and operational lives, giving the sector another boost.

Getting into a FLAP – on purpose

The latest evidence of reaction to the market demand for expanded and enhanced datacentres comes from NTT Ltd, which has just announced that its Global Data Centres division will develop and operate its first datacentre campus on a fully decontaminated, former brownfield site on the outskirts of the French capital, Paris.

Late last autumn, NTT Data and NTT Ltd, both subsidiaries of Japan’s NTT Group, announced they would merge with effect from April this year under the NTT Data brand. NTT Data is a $30bn IT services provider in its own right while NTT Ltd is a leading IT infrastructure and services company that serves 65% of the Fortune Global 500 list and more than 75% of the Fortune Global 100. 

One of the first fruits of the amalgamation will be the development (and operation) of a campus of three datacentres across a big, 14.4 hectare, site in the municipalities of Le Coudray-Montceaux and Corbeil-Essonnes to the south of Paris. The new hyperscale facility is part of a major $10bn datacentre construction programme that began last year and will run until 2027. The new campus will support a planned capacity of 84MW (84 mn watts of power) “critical IT load” across the three facilities.

Florian Winkler, the CEO of EMEA and global chief operating officer of NTT Global Data Centres, commented, “We will develop our presence in the Paris metro area in close partnership with the local municipalities, partners, and the government. The addition of Paris builds upon our long-term proven track record of developing and operating in continental Europe and the UK and is a precursor for NTT’s further expansion and growth in both, existing and additional new markets in Europe.”

Then, not entirely unexpectedly given the predilection the global IT and telecoms sector has for the mass production of convoluted, indeed,  tortured acronyms, Winkler came out with a new one (for me anyway) by adding, “This investment complements our existing and growing presence in Frankfurt, London and Amsterdam, and will complete our footprint in the FLAP Tier 1 markets in Europe.” Apparently ‘FLAP’ here stands for Frankfurt, London, Amsterdam and Paris. Well, I suppose we should be thankful the market in reference wasn’t Copenhagen, Rome, Athens and Podgorica. 

Another NTT goal is to achieve net zero emissions in the company’s own operations, including the sourcing of 100% renewable energy by 2030.

NTT is not the only huge Japanese telco to envisage a future role for itself in the global datacentre sector. Rival KDDI is investing heavily to become “a leader in the era of digital transformation” and already owns a wide range of datacentre operations across the Asia Pacific region and throughout Europe. Recently though, KDDI invested $1bn to raise its profile in the North American market and acquired Canadian interconnection datacentre assets from Toronto-headquartered Allied Properties – see KDDI splurges $1bn on North America datacentre expansion.

KDDI Canada will manage the newly purchased assets  from Toronto and, from there, it’s no more than hop and a skip into the US. However, should KDDI decide that is where it wants to jump to, big-time and under its own name, the cost of the expedition will be extremely high. Currently, KDDI has two datacentres in New York City and one in Los Angeles, California, but they are run under the Telehouse brand. 

As TelecomTV reported back in March 2022,  at the end of 2021 there were 728 operational hyperscale datacentres around the world and Synergy Research Group had calculated there would be a further 300 or so up and working by 2023. Synergy reckons there will be 1,200 on-stream in 2026 – and probably more depending on advances in AI, machine learning (ML) and quantum technologies. It may not merely be a once-in-a-generation event, it could be a once-in-a-lifetime opportunity and the chessboard is being set out, for winning and losing, right now.

– Martyn Warwick, Editor in Chief, TelecomTV