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Key insights from PTC 2024

A glimpse into the future of the data centre industry: Key insights from PTC 2024

This year’s Pacific Telecommunications Conference (PTC) 2024 in Hawaii was certainly one to remember. 

Bringing the digital infrastructure industry together to explore what lies ahead for the industry also  offered a platform to reflect on some of the changes during and post-pandemic. Unsurprisingly, every panel touched upon the critical intersection of technology, sustainability and the importance of placing Environmental, Social, and Governance (ESG) factors at the heart of decision-making.

But the most dominant theme this year? The spotlight was well and truly on the new demands coming from Artificial Intelligence (AI) and Machine Learning (ML).

Here is dive into some of these themes in more depth, underlining how the data centre industry needs to ready itself for the new wave of demand that’s coming from this new application.

Data privacy regulations and sentiment will drive location strategy

It seems that as Machine Learning comes to Europe it is unlikely to be centralised in hubs, but may be more distributed to meet regulatory and copyright requirements. Different regions and countries have different rules and standards for data protection and privacy, which may limit the transfer and storage of data across borders. This will affect the location and design of data centres that host these applications and services, not only driven by regulations, but also public perceptions around data privacy.

Whilst ML training applications are more efficient when centralised, some AI applications may need to be located closer to the user, driving a need for more edge compute capabilities. Centralising the training and development of ML models can reduce the cost and complexity of data processing and storage, and drive efficiency. However, where the models need to interact with users in real time, proximity to existing network hubs becomes more critical.  

In addition, given their larger scale, AI and ML applications are unlikely to be hosted in the traditional data centre hubs of Frankfurt, London, Amsterdam and Paris, given the difficulty in finding suitable land and power options. This means demand is increasingly being driven to other metros, where larger plots and sustainable power are more readily available.

As a result, demand planning is more complex and uncertain, since these applications are nascent and the needs are evolving. Compared with cloud computing, where historical usage patterns can help predict future growth, those of AI and ML are still emerging. Those looking to take the lead in the AI/ML space need to forecast and plan for the future demand, but they face a high degree of uncertainty and risk. In addition to self-build programmes, they will need to continue partnering with third party providers of data centre capacity to leverage local expertise and supply chains to mitigate the risks of growing quickly in new markets.

The pandemic has underlined the need for reach, reliability and flexibility

There were some interesting panel discussions at PTC about how the pandemic shifted our focus as an industry, by underlining society’s reliance on technology and cloud services. As a consequence, much future planning is focused around reach and reliability. Digital transformation is a key priority for consumers, businesses and governments, especially in the post-pandemic era. Data centres and hyperscalers need to engage and collaborate with governments and regulators, and advocate for policies and regulations that support and facilitate the development of digital transformation programmes.

The pandemic also showed us the importance of flexibility, being able to ramp up quickly, and the ability to course-correct. Working with third party providers is key, to avoid investing too much capital in the wrong place or time, and be able to shift and reallocate resources and capabilities. To enable this flexibility, data centres need to be responsive and proactive in their approach to new metros and sites, and select locations with options for expansion, both in terms of land and power.

The industry also needs to continue investing in the development of skills across the supply chain. There should be a focus on attracting and developing new talent in our industry, especially amongst those who are new-to-career. Our future success will depend on making the investment in people and skills today.

Sustainability remains a key decision-factor when selecting sites

Another recurring topic was around sustainability. The focus is no longer just ‘as fast as possible’ but also ‘as sustainably as possible’. Progress is being made in the right direction. As the Economist notes, “according to the IEA, between 2015 and 2022 the number of internet users increased by 78%… data centre workloads by 340%. But energy consumed by those data centres rose only by 20-70%”.

The industry must consider the environmental and social impact of its operations and activities, and adopt sustainable and responsible practices. And not just in terms of energy usage. New innovations in cooling technology can impact other scarce resources, such as water. While new, larger data centres are typically much more efficient than smaller, older sites, it is incumbent on operators to consider sustainability throughout the design and build process, and to ensure that focus throughout the supply chain.

Data centres need to align their goals and values with those of their customers and society, and demonstrate their commitment to sustainability. Transparency is key – especially in light of new regulations which will come into effect in the coming years.

Final thoughts

As we return to full inboxes and catch up after a busy week at PTC, it’s clear the industry is still experiencing strong growth at an exciting time for the sector. We are in the infrastructure business, where developing new sites, with sustainable power and future expansion potential, takes time. However the next wave of demand is coming to Europe, and the industry needs to be ready to support it.

To succeed, we will need to make some assumptions and make progress with early-stage projects, to help our customers mitigate risks as they scale in new markets. Collectively we all need to nurture new talent and support the progression of our teams, to be ready to support the next wave of growth. And more than ever, developing sustainably needs to be at the heart of the industry’s expansion plans. It’s going to be a busy few years ahead – and building trusted relationships, developing local expertise, nurturing strong teams and a relentless focus on sustainability will be the keys to success.

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