Arrival of key cable expected to attract international business, attention

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Drawn by the allure of new possibilities – and by the promise of speed – some 500 technology and business executives from all over the world, representing a variety of industries, gathered in Sandston earlier this month.

They came to the QTS Richmond data center in the White Oak Technology Park May 7 to learn about the latest advancement in internet connectivity – and to learn more about the place that it calls home: Henrico County.

To the uninitiated, the day-long summit may have seemed no different from any other conference in any other place.

But there was no mistaking its significance to those in the room: This was a chance for Henrico County and QTS to officially announce their presence to the internet world in a way no other community on this side of the Atlantic Ocean could.

Inside the QTS facility – the fourth-largest data center in the world, with 1.5 million square feet of space – is a one-stop shop for internet data traffic.

The facility houses the only U.S. network access point (or NAP) that connects a variety of land-based data networks with two recently completed high-speed underwater data cables to Spain and Brazil, making it one of just 11 international internet connection points in the U.S.

One of those subsea cables – the $160-million MAREA cable, which connects to Spain through Virginia Beach – is the fastest such line in the world, able to transmit a high-definition version of every movie ever made across the Atlantic in 42 seconds total.

Implementation of the NAP is akin to the concept of Richmond International Airport becoming a U.S. hub for American Airlines – and the only airport to offer nonstop supersonic flights to Europe and South America.

Like travelers, businesses that rely heavily upon the transfer of internet data want the fastest and most reliable connections.

“Companies that rely on the internet to support their business are going to want to be as close to those cables [as possible],” said QTS Chief of Staff Sean Baillie.

Numerous potential benefits

What does it all mean for Henrico? The potential benefits, county and industry officials believe, are significant:

• a growing share of global internet traffic;

• global recognition among technology, internet-reliant and other sectors;

• the imminent location of additional data centers at White Oak and potentially elsewhere in Henrico by companies anxious to connect directly with the new cables (buoyed further, perhaps, by the fact that Facebook is in the midst of building a $1.75-billion data center at White Oak);

• the associated proliferation of small- and mid-size technology firms locally that will use the NAP as a leg up to jump-start their own ideas and services;

• the potential for new, significant tax revenue for Henrico as data centers and other tech users move in; when its facility opens next year with 200 employees, Facebook instantly will become one of the largest taxpayers in Henrico and will generate another $141 million in economic impact annually for the region.

• the sustained growth of the local construction industry, as more data centers and related businesses take shape.

“Henrico County has the opportunity to become the next location known globally,” County Manager John Vithoulkas told attendees at the summit. “We will draw new businesses and entrepreneurs to our region.

“I don’t believe the impact the NAP will have on the quality of life for our region can even be realized yet.”

A ‘mini-Ashburn’

Baillie is even more bullish on the potential of the site, believing it could spawn a mini version of Ashburn, the Northern Virginia region that he calls home and that is home to “Data Center Alley” – the largest concentration of data centers in the world. The 60 such centers there total about 10 million square feet of space and handle about 70 percent of all global internet traffic daily. (QTS operates three data centers there itself.)

But there are no direct subsea cable landings in Ashburn. The fact that the Sandston site has two – which come by way of Virginia Beach, with two more likely to follow suit from France and South Africa within several years – will make it a desirable alternative for many users, he said.

“The [Sandston] NAP is going to become a focus for network traffic that comes into or leaves this continent,” Baillie said.

That may be particularly relevant as 5G networks begin to implement, bringing advancements such as more autonomous vehicles that will require massive amounts of data to be transmitted faster than ever, industry officials believe.

The Sandston site also holds appeal for companies that are leery of having so much of their data running through singular sites and are seeking to mitigate risk by diversifying and creating new data paths.

When Hurricane Sandy battered the Northeast in 2012, Microsoft officials realized that they were too reliant upon data centers in that region – which were knocked offline by the storm. Facebook had similar concerns, and so the two companies partnered with Spanish telecommunications company Telxius to build the MAREA cable – intentionally locating it at new European and U.S. landing spots (Spain and Virginia Beach). It’s one of 448 subsea cables in the world and the fastest of them all.

“We wanted to find a point on the East Coast that was close to concentration of data centers but also find a way to create a new model and build a new hub,” Microsoft Director of Global Strategy Frank Rey said during a panel at the QTS Summit.

Establishing a new access point for international data transmission protects companies when something does go wrong with one cable, Facebook Vice President of Network Engineering Najam Ahmad said during the same panel discussion.

“Our philosophy is that if anything fails, nobody should have to move a muscle or do anything – everything should [still] work,” he said.

‘A technology hub’

The practical uses for the QTS NAP are many, according to several panelists at the May 7 summit.

The NAP will make it easier and faster for Richmond-based trucking company Estes Express Lines to communicate and share and receive data from its back-office operations in India and the Philippines, Estes vice president and chief information officer Bob Fowler said. It also will make it easier for company officials to send and receive real-time updates on the exact locations of all 19,000 of their trucks – something customers are demanding, he said.

“They want to know real-time, ‘Where’s my shipment?’” he said. “The large customers want that information and want it now.”

Companies that don’t use offshore operations because of lag time now may find it easier to do so, an official from Richmond financial firm Davenport and Company said.

The NAP may not have the same immediate impact that a large manufacturing plant would, said Henrico Economic Development Authority Business Attraction Manager Twyla Powell, but its potential significance to the region is real.

“It has huge potential to sort of attract attention to us,” Powell said. “The subsea cables being directly connected to QTS Richmond NAP is a major enabler in growth of the IT [information technology] industry. Now it’s part of every conversation I have in Europe – every single one. If I went to South America, it would be part of every conversation there.”

Fowler agreed.

“It’s going to turn this area into a technology hub, and the talent will follow,” he said.

Fostering tech talent

That talent is something Henrico and other local school systems, as well as local universities, are working to foster.

“We will produce the kids that you need,” VCU School of Engineering Dean Barbara Boyan told summit attendees during a panel session. “Smart cities demand it, NAP demands it.

But, Boyan said, existing tech companies bear some of the responsibility to inspire future tech employees and business owners. The executive director of Richmond Technology Council RVATECH, Nick Serfass, agreed.

“How do we get folks to come here, how do we get folks to stay here?” asked Serfass, whose organization counts about 200 local tech firms as members. “We’re trying to get technology pros into schools and colleges to highlight the careers. We’re trying to work on that talent pipeline.”

Boyan explained that it can be challenging for universities to attract enough instructional talent on their own.

“People that can teach these kind of subjects [as professors] also can work for companies that will pay them much better than we can pay them in academia,” she said. “Industry, I think you need to step up to the plate and help us do it. We need you, but we realize it’s a partnership.”

Attracting and building a highly skilled, technically advanced workforce will create opportunities beyond technology, Powell believes, and will help boost all businesses in the county.

“I do believe that,” she said. “I think it lifts everybody.”

Site comes full-circle

That Henrico suddenly finds itself on the precipice of becoming a key player in the new era of global technology thanks to the QTS facility is a sort of fortuitous irony not lost on county officials.

The building that QTS occupies is what prompted the county to create the White Oak Technology Park in the 1990s, when Motorola wanted to build a semiconductor plant there. The state conveyed the entire site, then known as the Elko Tract, to Henrico, which expeditiously extended water and sewer and constructed a network of roads so that the plant could open in 1998. The plant operated as Infineon Technologies and then Qimonda until abruptly shutting down in 2009 and taking thousands of high-paying jobs with it.

QTS purchased the site the following year for use as a data center, though the space was significantly larger than it expected to need at the time.

Now that Virginia Beach has become a desirable landing spot for subsea cables from around the world – and because its location and potential for hurricanes makes it a less-desirable spot for large data centers that could house capable connection points – the QTS site in Sandston has become the closest direct point of connection.

Henrico officials decided to aggressively target data center users even before Facebook arrived. In 2017, the Board of Supervisors slashed the tax on such facilities from $3.50 to 40 cents per $100 of assessed value – making it the lowest such tax rate in the state.

“When bold moves coincide with serendipidous moments, we find ourselves in the midst of the extraordinary,” Vithoulkas said, marveling at the role the QTS facility has played in the county’s history during the past two decades.

The facility is likely to grow sooner rather than later, too.

An entity related to QTS filed a plan of development with Henrico County in March to construct another 710,500 square feet of data center space adjacent to the current facility and to the Facebook site.

Baillie wouldn’t divulge specific expansion plans but told the Citizen that growth would be inevitable.

“We know we’re going to have to build eventually,” he said.

Such continued expansion should only help attract other similar users, Powell said.

“The data center world . . . is all about having them look at you for the first time,” she said. “Once they look at you for the first time and you get a Facebook that lands here, then that sort of lends credibility in the industry that you’re legitimate, that you can handle the big guys, that you’re noteworthy.”

For Vithoulkas, the potential is limitless.

“We stand at a pivotal point where we can gain worldwide attention – creating jobs, creating wealth for our citizens,” he told summit attendees.

“Our county, our region is ready to make our next bold move.”

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