Micro Data Centers: Why Proximity Matters

In a Q&A, EdgeMicro Vice President & General Manager Martin Capurro speaks about the importance of edge computing, the advantages it has over traditional deployments and its impact on CRE in 2019.
Martin Capurro, Vice President & General Manager, EdgeMicro
Martin Capurro, Vice President & General Manager, EdgeMicro

Investment in data centers will continue to grow in 2019, industry research shows. Demand for low-latency connectivity to the cloud together with the overall increased pace of business currently drive innovation in data center development. EdgeMicro specializes in modular data center installations, which can be deployed at the edge of networks or fiber aggregation sites for a fraction of the cost of large-scale facilities.

Martin Capurro, vice president & general manager at EdgeMicro, sheds light on edge computing, its importance among emergent data center technologies and its relevance to the real estate industry. The company recently opened its first proof-of-concept lab in Denver, where clients will test the capabilities of edge infrastructure.

EdgeMicro specializes in modular and small data center deployments. How do these facilities compete with their larger counterparts?

Capurro: Edge computing is a major technology trend that will impact the commercial real estate industry in several significant ways. EdgeMicro is deploying micro data centers across the country and, eventually, worldwide to bring internet content, data and services much closer to consumers and corporate end users.

This is important because so much of the internet content that people and companies utilize is housed very far away from them, sometimes thousands of miles away in huge mega data centers that are clustered in locations like Prineville, Ore., and Loudoun County, Va. That would be fine if the information traveled in a straight line at the speed of light, but it doesn’t. When the cloud lives that far away, all the bits and bytes must travel through a gauntlet of routers. The data also flows through a zigzag of fiber and copper through a dated architecture. The sum of these inefficiencies creates lag after lag, until it finally gets to the end user device. And this is assuming just a static fetch like a news article. Today’s applications are interactive, triggering a barrage of these back-and-forths, impacted by some of the delays.

That may have been the best we could do with technology in 2001, but it doesn’t work for a world with consumers that are using their phone as their primary computing device, where wireless devices are mission critical for companies, where cars will soon be driverless, and much more. The cloud needs to be closer and the way to do that is to install very small data centers closer to end users. That will mean hundreds, thousands and eventually tens of thousands of these facilities on the map.

Technical infrastructure is a big factor in commercial real estate. Companies rely on connectivity and low latency for their business. How can edge computing impact the commercial real estate market?

Capurro: Edge computing is going to be lucrative for the commercial real estate market in several ways. One way is that all these micro data centers will typically be placed on commercial real estate that has the right combination of attributes. Those attributes include proximity to underground fiber, the right geographic location to reach populations of users, access to the right kind of power infrastructure and more. In some cases, micro data centers will be on properties that already house other telecommunications infrastructure. In other cases, micro data centers would be located in the parking lot of business buildings. Cell tower sites or manufacturing sites are also options. Leasing space for these installations will be a significant source of new income for property owners, particularly for multi-property landlords who strike deals with edge computing companies to deploy multiple micro data centers across a geographic area. One thing that remains true here as in real estate historically—proximity matters.

Leasing space for edge infrastructure projects is a direct economic benefit of edge computing, but the larger impact might be the indirect one that edge computing has on the marketability of many properties. Connectivity is one of the most important criteria that companies use to evaluate commercial space. In the past, the buildings that typically had this kind of connectivity were the few that were located near underground telecommunications fiber.

Buildings that were further away from fiber often fell short of the kind of connectivity that tenants were looking for, and per-square-foot rates and overall property values suffered as a result. But edge computing will bring low latency to more buildings than ever before—pushing many buildings into the “highly connected” category for the first time. That will raise leasing rates and the value of buildings in a significant way.

How can edge computing help level the playing field between metros with rich connectivity and availability and those without it?

Capurro: Not all metro areas have historically had access to equal infrastructure. If you are one of a handful of metro areas that are major hubs for telecom fiber and that house major internet peering facilities and data center infrastructure—Silicon Valley, D.C., Chicago, Dallas, Miami—your citizens have been enjoying far better connectivity compared to metro areas that don’t have those advantages. This digital divide has a major impact on consumers, corporations and the value of commercial property.

One of the most exciting things about edge computing is that these micro data centers democratize the internet by making low-latency connectivity available to a much larger portion of the map. If you imagine the ultra-low-latency areas as green on the map of the U.S., there would have only been a few green splotches in the past around certain cities like those I mentioned above. But even within those green splotches, only certain portions would truly be green, clustered around the fiber lines underground. Edge computing is going to turn that upside down by painting entire metro areas green and painting much more of the map green—far beyond those traditional metro areas.

If you look beyond the U.S. borders, the impact of edge computing may be even more exciting. The digital divide is enormous between countries with traditional data center infrastructure and those that don’t have those assets. Micro data centers can help countries make a huge leap forward in the same way that cell networks helped them leapfrog the step of building out complex, expensive traditional telecommunications infrastructure. Cell phones have been one of the great tools in history for leveling the economic field for people in developing countries, and I believe these small, portable, affordable micro data centers will have a similar impact.

EdgeMicro’s recently announced micro data center deployment in Denver is a pilot project in which several tech companies are participating. Tell us a bit about what the project entails and what it aims to achieve.

Capurro: One of the reasons I joined EdgeMicro is that the team here isn’t about flash and buzz and all that typical stuff that tech companies get caught up in. The team here likes to keep their head down and get stuff done, and that is what the proof of concept (POC) lab in Denver is all about. We sat down with many influential companies in the tech industry and asked them what they need for the next phase of their edge strategy. It turns out that what they needed was a live edge environment where they could do proof of concept testing for pilot projects as a last step before moving forward with large-scale rollouts.

Some of the other edge data center companies are still at the concept phase, but we had everything these companies needed—a great data center design, live units that are ready to deploy, sites that support their testing needs, connectivity partners that can deliver what the customers need etc. Most importantly, our team comprises experienced people in key areas that relate to edge computing—colocation, wireless networking, data center design, internet peering and exchange, data center operations, real estate and more.

Those pilot projects are underway in Denver, and I’m very excited by how bold the participating companies’ visions are for the edge. This isn’t just about moving popular YouTube videos closer to users. This is a fundamental rearchitecting of how the internet and the cloud works and it’s exciting to be at the epicenter of that.

EdgeMicro plans to deploy dozens more such facilities across the U.S. What are the main criteria for picking where to build?

Capurro: This is worth revisiting since this is a major new revenue stream for commercial property owners. This is different than traditional data center builds, as edge isn’t just expansion of the status quo. It is necessarily turning the Internet on its head by distributing centralized peering and content. Some of the key criteria edge companies will remain similar, such as access to fiber and to reliable power. However, identifying key locations that may allow applications to perform two to five times faster or more consistently is key. This has us looking at applications data flows and user distributions to better understand where the right place for the edge will be.

Those are all quantifiable attributes, but I should point out that another factor will be property owners’ familiarity with working with tech and telecom companies since these tend to be very different types of projects and leases than a company signing up for 10,000 square feet of Class A office space. Being knowledgeable about how edge computing works, the underlying telecommunications fiber in the vicinity and power capabilities are all central to conversations with potential edge tenants. Property owners who know how to support tenants that need to go through permitting and zoning processes for infrastructure will also be a plus for attracting these lucrative edge implementations.

How will edge computing complement the rollout of 5G networks?

Capurro: 5G is all about lowering latency and increasing throughput. It allows much faster communication between cell tower and the phone or a mobile device. 5G reduces that latency in a way that will be noticeable to end users, but 5G doesn’t solve the entire latency problem. Yes, it makes communications to the tower much faster, but if content and services are still living thousands of miles away in mega-data centers, latency will still be a problem.

Moving internet content closer allows 5G to truly live up to its billing, and telecom companies are starting to realize that. They have marketed 5G as the future of the internet, and users’ expectations are incredibly high as a result. Wireless providers don’t want 5G to go over like a lead balloon due to latency that has nothing to do with 5G. Edge infrastructure is a key to delivering on that promise.

If the Denver POC proves successful, what’s the next step for EdgeMicro’s deployments?

Capurro: We have a nationwide rollout of edge data centers planned for 2019 and are working closely with many of the companies who are currently doing pilot projects in our Denver facility. There are several companies that are doing exciting things to advance edge computing. This technology is the only way to deliver low-latency connectivity and it represents a lucrative opportunity for the commercial real estate industry.

Photo courtesy of EdgeMicro