happy man on a cloud with PC

Growing the local data centre industry

The data centre industry has more economic impact than most people give it credit for. During a workshop for the media, MDEC Head of Data and Cloud for the Digital Enablement cluster, Tan Tze Meng underlined the well-known fact that the Internet is a connection machine and these connections are changing the world.

But a lesser known, or rather less talked about fact is that a lot of the interactions that people are making online, be it to pay a bill, to shop or to communicate with colleagues, is only possible because of data centres.

Tan reiterated, “Every aspect of modern life, relies on a data centre somewhere to function.” In fact, every company providing Internet services have a big data centre that is connected by miles and miles of optic fibre for connectivity.

The other facts and observations that he shared, were also rather chilling.

Tan Tze Meng

Tan Tze Meng

For one, Malaysia undergoes a huge net outflow of funds because most of these companies locate their data centres far from our shores. Imagine making an overseas call that carries over 20,000 kilometres of fibre optic cables in the ocean, as opposed to just a local call.

Chilling fact number two is that the local data centre industry (service provider portion only) is contributing less than RM1 billion in revenue. The billion ringgit mark however could be breached by end of 2017.

This statistic provided by analyst company Frost and Sullivan further extends this projection to end of 2020 with an estimated value of RM2.1billion revenue.

In contrast, social networking giant Facebook is valued at over USD100 billion with over a billion users. As a comparison this is unfair, but it is a good indicator of how much further the local industry has yet to go considering Facebook is already pumping over 100 petabytes of data daily, through their data centres. Each data centre is the size of three rugby fields.

Connectivity challenges

There are many factors that hinder growth for the local industry. High electricity tariffs is perceived as one. Slow and expensive connectivity is another. But there is good cause for concern. Enough for MDEC to recognise and take preemptive steps.

Malaysian data centres spend at least 25-percent of their operational cost on bandwidth compared to 5-percent for data centres located in Singapore, Hong Kong, Japan, UK and US.

Why isn’t bandwidth cheaper?

To this question, Director of MDEC’s Digital Enablement Cluster, Wan Murdani Wan Mohamad shared that MDEC does work closely with the agencies that are responsible, to carry out the connectivity mandate for faster and cheaper broadband.

“MDEC has limitations in what we can do. We play the role of putting the ecosystem into place,” Wan Murdani said.

One of their main efforts to overcome the connectivity challenge is with the Inter-DC network. Tan explained that the objective is to bring down cost of bandwidth through aggregation and bulk purchase.

MDEC has seeded this project by paying for the lease of infrastructure and worked with AIMS Data Centre, a local player to put it into motion.

This project is expected to reduce bandwidth retail prices by as much as 80-percent.

Wan Murdani has expressed hope that MDEC would be able to replicate this model in other parts of Malaysia, and effectively improve connectivity speeds and cost.

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