Ireland reclaims its high-tech hotbed status

22 Feb 2005

Between 1999 and 2000 IDA Ireland joined a Europe-wide race to build data centres that were described as “engine rooms of e-commerce”. Back then policy makers had a novel idea that Ireland could become a European hub for e-commerce. In the space of a year, some 22 companies invested more than €500m in building capital-intensive data centre facilities. And then the dotcom crash happened.

The devastation visited on the technology and telecom markets in the intervening period wreaked havoc on these data centre firms and their business plans, and even long-standing international telecoms carriers got hurt in the crossfire. The list reads similar to a litany of the dotcom dead — CityReach, Exodus, Worldport, Wolfe Group, Inflow and 360 Networks are just a few — and many, after building enormous data centres capable of withstanding a plane crash, hadn’t even succeeded in getting a single customer into the facility.

Many centres, with an average investment of some €25m, saw their value fall by 90pc. By the end of 2002, less than six of the original 22 data centres were left in business. IDA Ireland’s strategy, it appears, was dust and the internet and e-commerce players never came.

Zoom forward to 2005 and the IDA can today claim some vindication of its original strategy. The agency has successfully attracted major brand names in the internet world, including, Google and eBay, to name a few and is still optimistic about catching more.

As well as this, according to Kevin McCarthy, IDA Ireland’s manager of telecoms infrastructure in its strategic business unit, the level of take-up in the past two years in terms of data centre capacity has been better than in the halcyon days of 2000. According to McCarthy, out of the 22 data centres built, only one currently stands vacant. In fact, he says, the existence of so much spare data centre infrastructure is a plus for attracting major internet projects. “What would have been regarded as a negative four or five years ago is now a positive tool in marketing Ireland for these projects. The facilities are world class and the people who manage them are world class,” McCarthy says.

Last week, the agency succeeded scoring its biggest internet coup in attracting portal giant Yahoo! to Ireland, which will result in the creation of 400 jobs. The company would not confirm, however, whether it would build its own data centre or acquire one of the many leftover data centres. Yahoo! chief operations officer Dan Rosenweig said: “Our growth rate has made data centre capacity a big issue in our industry. However, the answer to that kind of question is commercially sensitive in our industry.”

According to McCarthy, there is a push to deploy more data centre capacity, especially outside Dublin, and plans are afoot to establish data centres in Cork and Limerick to link up with the various metropolitan area networks (MANs) around the country. “A decision is imminent by a major player interested in building a data centre in Limerick,” he reveals.

“We would like to win more big internet and digital content companies. Major brand names have been won against intense competition and this was a key element in our decision to fund the expansion of the Internet Neutral Exchange [INEX],” McCarthy said.

INEX is the Irish internet hub where internet protocol traffic is exchanged between carriers, internet service providers (ISPs) and digital content providers. The size of the loan was not disclosed but sources close to the deal put it at “the upper end of six figures” — or pushing €1m. The money will be used to fund the expansion of INEX from being a national to an international facility. Specifically, the money will be used to create new server capacity as its TeleCity data centre in Citywest Business Campus, Co Dublin, will light up fibre between Citywest and its sister facility at Data Electronics in Clondalkin and establish marketing offices that will be used to secure new business from a range of international ISPs, telcos and digital content firms. Additionally, IDA Ireland will sell the INEX facility to prospect companies around the world through its overseas office network.

On whether IDA Ireland feels any vindication for its original data centre strategy, McCarthy said: “We decided to continue to go after these companies and to be ready when they felt they were going to have real growth and infrastructure issues. A few years down the road I can say that the timing suits everybody and the business environment is more desirable. To be able to bring in major players and show then 10 data centres is a major plus.

“Going forward, the aim is to push more infrastructure to the regions and with the MANs and the existence of both the ESB and Bord Gais’ countrywide fibre networks, the opportunity to deploy future internet projects to the regions is very strong.”

Pictured: Pictured at last’s week’s Yahoo! investment announcement were (from left): Dan Rosensweig, chief operating officer at Yahoo!; Minister for Enterprise, Trade and Employment Micheál Martin TD, and Seán Dorgan, chief executive of IDA Ireland  

By John Kennedy