The Netherlands is emerging as a data center country

DatacenterWorks | News Editor | August 2012 

‘Most value for your money’ 

The Netherlands is very popular among foreign suppliers of data center services. A good example is Terremark, an American company that chose Amsterdam over London, Frankfurt, and Paris for the construction of its first ‘Network Access Point’ in Europe.  Softlayer too recently opened its first European data center in Amsterdam. In addition, the British company TelecityGroup already has five operational data centers in Amsterdam. What exactly is making the Netherlands so attractive as a ‘data center country’?

The data center industry is experiencing a strong expansion worldwide. That expansion is even stronger in our regions, as revealed by various research studies. For instance, DatacenterDynamics predicted in 2011 that server space capacity in the Benelux would increase by 14% between 2011 and 2014. That is 10% more than in the United Kingdom. The investments made in the Benelux in data center capacity were predicted to increase by 16% in that same period, resulting in a total amount of investments in the Benelux of USD 1.5 billion.

An important explanation for the considerable expansion of the Dutch data center industry is the fact that the demand for capacity still vastly exceeds the supply. The appeal of the Netherlands for foreign investors is certainly also playing a role in this matter. The Netherlands Foreign Investment Agency (NFIA), a part of the Dutch Ministry of Economic Affairs, Agriculture, and Innovation, which assists foreign companies in establishing a presence in the Netherlands, is reporting a considerable increase in the number of applications from abroad for the construction of data center space in the Netherlands. According to the NFIA, the appeal to foreign investors can be explained by the good telecommunications infrastructure, the reliable energy supply, the strategic location, and the innovative character of the Netherlands as a ‘data center country’, among other factors (see also the section ’10 factors for success’). 

Connectivity
The Netherlands is one of the most connected countries in the world. Of the fifteen submarine cables, eleven are directly connected to the Netherlands. As a result, our country has an excellent broadband connection to the rest of the world. In addition, the largest internet junction in the world is located in the Netherlands. The Amsterdam Internet Exchange (AMS-IX) offers a fast, cheap, and redundant connection via the more than seventy carriers present at the AMS-IX sites to approximately 475 internet-related companies.

One of those AMS-IX sites is Terremark’s ‘NAP of Amsterdam’, opened in September, 2011, on the grounds of Schiphol airport.  The good connectivity offered at this site was one of the main reasons that Verizon's subsidiary chose to build its first European data center in the Netherlands. “We did consider various sites in Europe,” said Eric Lisica, VP Datacenter Services Europe at Terremark. “The Netherlands, and more specifically the region of Amsterdam/Schiphol, offered the best opportunities by far,  due to its considerable need for colocation services, and the substantial presence of carriers. The fact that almost all large carriers have a presence in the Netherlands was a decisive factor for us. In addition, the colocation market is more developed here than in other European countries.”

The connectivity offered was also an important reason for ServInt to select the Netherlands as the site for the construction of its first data center outside North America. The American provider of ‘managed cloud hosting services’ opened its Amsterdam data center, ‘ServInt EU’, in June of this year. “Our three data centers in the United States are located at sites offering the best connectivity and technical support. It is for that same reason that we have selected Amsterdam as the site of our EMEA data center,” said Christian Dawson, ServInt’s Chief Operating Officer. For instance, the Netherlands offers a low latency in  connections to other European countries: on the connections to London, Paris, and Frankfurt, the latency remains below three milliseconds.

“In selecting a suitable site, ServInt analyzed eleven different technology centers in Europe. With the exception of Amsterdam, no other region offered the mix of world-class connectivity and optimal power supply at an affordable price,” continued Dawson. “For an internet-related IT company such as ServInt, the Netherlands offers the most value for the money within the EU region.”

Reliable power supply

In making his statement, Dawson points out another important advantage of the Netherlands as a ‘data center country’: the power supply. The ample availability of electricity was also an important reason for Terremark to select the Netherlands and more specifically Schiphol. “A data center  requires not only a lot of space, but also a quantity of electricity that is usually difficult to obtain,” said Eric Lisica. “For instance, London is considerably congested and an adequate supply of electricity is simply not available. Schiphol can supply us with the acreage, as well as with the 46 MW of current, that we need to be able to achieve our ambitions for the future."

In addition, the reliability of the power supply is crucial to the availability of the data center. In comparison with other European countries, the distribution of electricity in the Netherlands is one of the most reliable in Europe, measured in the number of power failures per year, as well as in the number of minutes per year that the power supply fails. According to Eurostat, the Netherlands also scores favorably when  the price of electricity per 100 kWh is considered: only in Estonia, Bulgaria, Finland, France, and Romania do consumers pay less for electric current.

Favorable economic climate

Additionally, the Netherlands is also appealing as far as the costs of constructing and maintaining data centers are concerned. The  Financial Times' ‘fDi Benchmark’ data for 2012 reveal that the costs of staff support are more favorable in Amsterdam than in Brussels, Frankfurt, and Paris. London is approximately at the same level. In Dublin, you generally pay somewhat less for positions such as an industrial engineer or a systems analyst. The real estate prices in the Netherlands have been declining steadily in recent years.

In addition, the Netherlands scores high as far as level of training and language skills are concerned. However, the favorable economic climate might be the most important reason why foreign parties opt for the Netherlands. The Netherlands has one of the lowest corporate tax rates in Europe, and as a consequence, a very competitive tax climate. In addition, innovative entrepreneurs can qualify for additional tax cuts. Data centers using energy-saving or sustainable techniques can, for example,  claim the Energy Investment Allowance (Energie Investeringsaftrek, EIA).  Furthermore, the laws in the Netherlands are often experienced as less stringent than in other European countries. “Most importantly, the Netherlands has a relatively favorable economic climate,” added Eric Lisica of Terremark.

Snowball effect

At the moment, 33 percent of the European data centers are located in Amsterdam. The presence of large data centers, such as those of Google in Eemshaven, Groningen, and Terremark’s NAP at Schiphol, will only further strengthen the appeal of the Netherlands to foreign suppliers of data center services, and create a snowball effect.

A good example of that is GoGrid, an American Infrastructure-as-a-Service (IaaS) provider that opened its European head office in Amsterdam, where the customers are, at the beginning of this year. “GoGrid chose Amsterdam due to its good network connectivity, central location in Europe, and the proximity of companies looking for an IaaS provider,” said Bobby Brown, Vice President of Operations and Support at GoGrid. “In the meantime, Amsterdam has proven itself to be a solid basis for GoGrid.”


In order to offer data center services to European customers, GoGrid uses one of the Amsterdam data centers of the American company Equinix. The latter is another example of a foreign data center party expanding considerably in the Netherlands. The opening of ‘AM3’ is scheduled in the third quarter of this year. AM3 is Equinix’s third data center in Amsterdam, and the fifth one in the Netherlands.

10 factors for success

Why is the Netherlands such an attractive location for building data centers? The NFIA has defined ten 'factors for success':

  1. The superior infrastructure. The Netherlands is one of the most densely cabled countries in the world. The more than seventy carriers connected to the AMS-IX ensure reliable and fast connections within the Netherlands, and to the rest of the world.
  2. Good accessibility. Its central location in Europe and the adequate logistical infrastructure have transformed the Netherlands into the 'gateway to Europe'.
    3. The focus on innovation and sustainability. In multiple sectors, the Netherlands offers an ideal platform for the development of innovative solutions. Energy-efficient and sustainable initiatives are rewarded.
  3. The economic and political stability. With its low inflation and low unemployment figures, the Netherlands is still one of the most economically stable countries in Europe. In the Economist Intelligence Unit's ‘Political Instability Index 2010’ , the Netherlands ranked 146th of 165 countries, making it one of the twenty least unstable countries in the index.
  4. The focus on international trade. The Netherlands’ open economy makes it an internationally oriented country where foreign companies quickly feel at home.
  5. The proper regulations for data storage. The Netherlands has relatively favorable laws and regulations for data center operations. For instance, data centers in the Netherlands are not automatically subject to the Telecommunications Act. Therefore, measures concerning wiretapping and the like are unnecessary. The Netherlands also has laws, in addition to those of the European Union, which impose restrictions on transfers of data abroad. This is particularly  important for American companies.
  6. The reliable power supply. The Dutch energy network is one of the most reliable in Europe, and the energy rates for wholesale users are relatively low in the Netherlands.
  7. The highly-educated and multilingual workforce. Dutch personnel are typified by high productivity, good training, and excellent language skills.
  8. The economic climate. Compared to other European countries, the Netherlands has a very favorable tax climate.
  9. The presence of large data centers. The presence of parties such as Google and Amazon constitutes a confirmation for newcomers that the Netherlands is a serious option.

NFIA

Foreign suppliers of data center services that want to establish a presence or expand their activities in the Netherlands can contact NFIA for assistance and advice. This unit of Agency NL, an operational body of the Dutch Ministry of Economic Affairs, Agriculture, and Innovation, offers assistance in comparing the countries that qualify for establishing a business, and in preparing a business case, among other things.  The NFIA also brings foreign parties in contact with local partners, such as the AMS-IX.

Among the companies that have called upon the assistance of NFIA in the past are global IT companies such as Cisco, Huawei, and Samsung. Terremark  has also obtained the advice of NFIA in the run-up to the construction of the ‘NAP of Amsterdam’. “The construction of a data center obviously requires the necessary permits, which makes the run-up phase very complex. We have benefited from a lot of support from NFIA and its regional partners in that respect,” said Eric Lisica, VP Datacenter Services Europe at Terremark. “In addition, we were always able to also rely on them for free support, information, and advice in other areas, such as in regards to tax and subsidy regulations. As the NFIA has an extensive network of business partners and government agencies, they were moreover able to put us in touch with the right people at agencies such as the Tax Authorities and other units of NL Agency. This  considerably accelerated the processes concerning the construction of our data center.”

Represented worldwide

NFIA was created more than thirty years ago, and has since then assisted approximately 2,800 companies from almost 50 countries in establishing a presence and/or expanding their international activities in the Netherlands. In addition to its head office in Den Haag, NFIA has offices in the United Kingdom, Turkey, North-America, Asia, the Middle East, and Brazil. Furthermore, the NFIA is cooperating with Dutch embassies, consulates-general, and other organizations representing the Dutch government abroad. Within the Netherlands, the NFIA is connected to municipalities, provinces, Regional Development Agencies (Regionale Ontwikkelingsmaatschappijen, ROMs), ports and airports, public services, and top institutions.

 August 2012