How London became the data centre capital of Europe

Written by Max Smolaks, News Editor, Datacenter Dynamics Published 2018-08-08 09:35:03

London has long been a centre for trade and commerce. It sits at the edge of the continent, but is in a prime location for reaching the Americas. Ever since the days of the telegraph, trans-Atlantic cables have stopped here before carrying their signals onwards to mainland Europe. So it comes as no surprise that the city naturally emerged as a meeting point for digital networks, a primary node in a global superstructure.

Heritage is another factor: from the first programming language to the first modern computer (the EDSAC), to the world's first supercomputer (the Atlas), the British have been at the forefront of digital innovation. They have been responsible for the first web browser and the ARM architecture, powering most of the world's mobile devices. Fibre optic cable, the very material that connects data centres, was invented in the UK and later perfected in the US.

More recently, the city has given birth to a vibrant start-up culture. In Shoreditch, you can't walk ten feet without hitting a co-working space or an accelerator specializing in early stage Blockchain companies.  These companies require infrastructure, as well as technical and engineering skills. So we might not have all the IT staff we need - but boy, do we have a lot of IT staff.

Of course, special mention goes to the finance industry. Proximity to the only global stock exchange in Europe has driven investment in low-latency networks and infrastructure across the city. Research by DCD published in 2016 suggested that at the time, finance still accounted for about one-third of all data centre capacity in London, including in-house facilities and colocation.

A lot of London's success is down to network effect, both literally and figuratively: as the connectivity improved to serve existing data centres, more data centres appeared - much like in the major European markets of Amsterdam, Paris and Frankfurt. This in turn, created competitive pressure on operators, resulting in more choice - in London, if you can plug Ethernet into it, it will be available as a cloud service.

Being close to the financial industry has also meant easy access to capital for large infrastructure projects - hence, the large number of global construction and engineering firms headquartered in the UK that will be happy to build a state-of-the-art facility. And finally, financial organizations have very particular requirements for data centre services, demanding high levels of availability and security, driving the average standards ever so slightly upwards across the country.

London's dominant position could be threatened by Brexit, if businesses suddenly decide to relocate elsewhere, but there doesn't seem to be an observable impact yet - after all, we still have no idea what the UK's future relationship with the European Union will look like.

Right now, data centre business is booming - according to CBRE, London was responsible for 54MW of colocation take-up in 2017, setting a new European record.

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