November 5-7, 2019: ICT & Logistics
Rotterdam as digital data hub
Why is the Netherlands ranked so high on this list?
The DESI evaluates countries on connectivity, human capital, the use of internet services, integration of digital technology and digital public services. The Netherlands is ranked top 5 is due to the technical infrastructure and ecosystem that are adapted to the data-driven digital economy. In addition, the Netherlands hosts the Amsterdam Internet Exchange (AMS-IX) and the Neutral Internet Exchange (NL-IX), both of which are among the top 10 largest internet nodes in the world. The Netherlands is therefore also called “the Digital Gateway to Europe”. The Netherlands is geographically central to the European market. This allows data that is sent from the Netherlands, to be spread across locations in Europe with the best average latency. This makes the Netherlands an important location for tech companies and data centers.
Cluster area Amsterdam
International connectivity is important for the positioning of a region. Historically, many international companies have laid their foundations in and around Amsterdam. This is because of the favorable business climate and accessibility via Schiphol. In Amsterdam, the various data center parks are clustered close together. Internationally, Amsterdam is ranked high on the list regarding areas where data centers cluster so strongly.
However, this also entails risks. The Dutch Newspaper NRC recently wrote an article that discussed that the power grid of Amsterdam cannot keep up with the digital revolution. The Amsterdam region had to cope with several power outages in recent years. Can the electricity network in Amsterdam still meet the amount of electricity that the region needs? Data centers use an enormous amount of energy. Suppose the entire Amsterdam region would switch to electric cars in the future, or all homes would be powered by natural gas. Could the Amsterdam electricity grid still be able to supply such a large extra amount of electricity? Moreover, the spatial area is already full of data centers and there is little space left.
The demand for more data centers
Digitization is rapidly transforming our economy and society. Digitization is the main source of growth, innovation and new business. The digital economy will continue to grow, increasing dependence on computer technologies. This also means that people and organizations will use more and more data in the future. Increasingly people will use business-critical applications, the execution of financial transactions, data sharing, and for real-life applications that require high capacity and low latency (such as online gaming or virtual reality).
When more data is sent, this also requires a solid online infrastructure to bear the workload. This transformation requires high-quality digital connectivity that grows with the needs of society and the economy. Because there is more demand for data and connectivity, the demand for data centers will grow as a result.
Rotterdam as back-up location
Because most data centers in the Netherlands are located in the Amsterdam area, this makes the region vulnerable with regard to the level of energy consumption, the risk of power outages or other disasters. Because many data centers cluster around Amsterdam, many companies depend on a relatively small area. A disaster in this region can have major economic consequences. For example, on May 13th, 2015, there was an incident on the AMS-IX with major consequences. During maintenance work, an employee made a mistake, consequently the internal routers and switches were overloaded. In the end the outage lasted less than an hour, but this incident shows how dependent we are on the junction in Amsterdam.
To prevent damage in case of an emergency, many companies put their data storage independently of each other in data centers in different regions. This serves as a back-up location. Rotterdam – The Hague Metropolitan Region is a collaboration between 23 municipalities in the region. The Rotterdam-The Hague region can develop positively in the field of data exchange infrastructure. The research of the Metropolitan region comes to the conclusion that it would be very positive if the Zuid-Holland region were to develop into a “twin hub”.
Rotterdam as a digital main port
Rotterdam has one of the largest harbors in the world and is, therefore, alongside Schiphol, an important main port for the Netherlands. On the other hand, it is lesser known that Rotterdam also has an important share in the Dutch digital main port. Nowadays, Rotterdam is widely praised for its position as a connectivity node in Europe.
According to the British business newspaper the Financial Times, Rotterdam and The Hague are at the top of the list of European Cities of the Future in terms of connectivity. The British business newspaper publishes this list every two years in its annual fDi Magazine. With regards to connectivity, Rotterdam is number 1 thanks to the quality of the port and Maasvlakte II, the airport, accessibility, and the IT infrastructure. In addition, the NL-IX operates in Rotterdam with a local Internet Exchange, the R-IX and is a good base for connections to London, Amsterdam, Paris, and Frankfurt.
The future for Rotterdam
In the Netherlands, much of the internet traffic currently depends on the Amsterdam Internet Exchange (AMS-IX). Several parties realize that this can entail risks in the future and argue that the interconnection needs a better geographical spread. Therefore, it would be positive if Rotterdam developed as the second data hub in the Netherlands. This offers opportunities for the R-IX, but also for businesses in Rotterdam to take advantage of this matter, and thus bring digital transformation to the region. Companies and municipalities have already started a lobby to recruit international technology concerns to the region. The province of South Holland has also started a study to gain insight into the economic niches of the digital economy in South Holland. They look for opportunities that contribute to the digital economy, such as the construction of the 5G network, fiber optic connections or the role of data centers. In short, there are many opportunities, now they must also be tackled.