Digital Infrastructure : LET’S GO DUTCH !!!

Presentation1
One of the few countries in the world that punches way outside its weight class is Holland aka the Netherlands.Comparatively, the area occupied by the Netherlands (33,883 sq km) is just twice the size of Gauteng ( the economic hub of South Africa ).The 16 million Dutch people pump out a whopping GDP that is almost 3 times South Africa with its 53 million people. Unlike resource rich South Africa , Holland has nothing except the diligence and intelligence of its people. From an early age there’s a feeling instilled in the Dutch that they can do anything. You can cycle anywhere in the land without fear of being laughed off the road or run down by speeding maniacs. The Dutch transport system is brilliant : trains run all night long between Amsterdam and the Hague. Not to mention the delish cheese , pictoresque canals, a national park with an amazing museum hidden inside and the breath taking painting masterpieces at Rijksmuseum…. well you’ll just have to go visit to see the rest !

Ofcourse Holland is not all cheese and tulips and its great people who gave military funerals to all the victims of MH17 flight tragedy over Ukraine.In Europe, the Dutch are among the frontrunners in the area of Digital Infrastructure (Internet connectivity, colocation housing and hosting).In many ways this infrastructure fulfills a gateway function, similar to that of Schiphol Airport and the Rotterdam Harbor. Amsterdam based AMS-IX remains the largest Internet exchange point in the world and the colocation housing market, centered around Amsterdam, produces strong growth rates. The Dutch also rank among Europe’s elite in hosting. The services that encompass Digital Infrastucture on core Internet on one hand and colocation, hosting and IaaS on the other include :

• Internet Exchange: Parties that facilitate networks to interconnect with each other to exchange Internet traffic mutually (peering). This is typically done without charging for the traffic
• Transit Provider: Parties that provide network traffic in the ‘core’ Internet and connect smaller Internet service providers (ISPs) to the larger Internet
• Colocation: Delivering facilities (floor space, power, cooling, network connectivity) to enterprises and service providers for housing servers, storage and other computer equipment as an alternative for an in-company data centre
• Dedicated hosting: Delivering computing power and storage via equipment dedicated to a specific client but managed by the hosting provider
• Shared hosting: Delivering computing power and storage by sharing the resources of physical equipment among multiple customers
• IaaS: Infrastructure-as-a-Service, delivering computing resources (e.g. servers, storage) according to a model that meets the essential characteristics of Cloud computing: on-demand self-service by the customer, measured service (pay-per-use), rapid elasticity (any quantity at any time), resource pooling (multi-tenant model) and broad network access (infrastructure is available over the network via standardised mechanisms

The Amsterdam Internet Exchange (AMS-IX) is the largest in terms of connected Autonomous System Numbers (ASN). The significance of an Internet Exchange is measured by the number of peering networks (Autonomous System Numbers) and and the Peak Internet traffic in Gigabit per second. AMS-IX is a mainport for Internet traffic more than Rotterdam and Schiphol are for containers and passengers respectively. London, Frankfurt, Paris and Amsterdam form the leading group of colocation data centres hot spots in Europe. Measured in colocation supply m2 per € bn GDP, Amsterdam exceeds all other cities.As a result Netherlands is hosting the top of the world’s technology and Internet companies as gateway to Europe and the Internet such as : Facebook , Twitter , Netflix , Akamai , Amazon , Google and on and on. For this reason world’s largest service providers and e-commerce companies have chosen Amsterdam as their #1 or #2 Internet Exchange position in the EU. Large investments in data centres within the Netherlands by corporate multinationals like Google and IBM generate additional employment. Direct employment in the Digital Infrastructure sector adds up to 7,600 FTE, of which 90% in the hosting sector and 10% in capital intensive housing. Operational expenditures and investments in the housing and hosting sectors drive indirect and induced effects to create additional jobs. Combined effects for the Digital Infrastructure add up to 19,000 jobs in 2013 with a projected growth of 8% a year.The real value of the Digital Infrastructure sector, however, lies in its significant impact on the much larger Internet economy and broader digital society.

A continues interaction between Digital Infrastructure, service innovation and online usage drives growth in the online ecosystem. Digital Infrastructure is part of a much larger online ecosystem generating at least ~ €39 bn in revenue in the Dutch economy. Including private investments, government spending and trade, the Internet economy in Netherlands adds an estimated €34 bn to the GDP which is approximately 5.3% of the total GDP and steadily growing. There is a strong correlation between the Digital Infrastructure and e-commerce which shows that the former is a key enabler because E-commerce application are hosted in data centres and e-commerce traffic flows over the Internet exchange(s). The employment generated by e-commerce in Netherlands is estimated between 100,000 and 140,000. SaaS and PaaS are two of the Digital Infrastructure’s closest relatives, generating 5,700 jobs in the Dutch economy. Google has invested €600 million on a data centre located in Delfzijl, the Netherland.The estimated additional employment that the data centre will provide is 150 FTE from operations and a 1000 FTE at the peak of construction. The presence of most major global data centre providers in the Netherlands is prove of the country’s attractiveness in terms of Internet Connectivity, availability of required electricity capacity , economic and political stability and highly-educated and multilingual workforce.

A large and complex ecosystem of companies and other entities compete, collaborate and cooperate to construct and maintain the interconnected network of networks that is the internet. The ecosystem works, and anyone can download a web page or video, or activate a mobile app, because of common standards and a shared understanding among participants of the benefits of a vibrant and growing economic system. Countries need energetic digital service sectors. They are drivers of social and economic development, job creators, talent magnets and the exports of the future. Robust digital service sectors depend on a complex ecosystem that includes adequate infrastructure and an investment-friendly business environment. The availability of mobile spectrum is one of the biggest, and most complex, infrastructure constraints especially in Africa. Governments must release additional spectrum – licensed and unlicensed – for private mobile use, as well as take steps to encourage spectral efficiency. New approaches to encourage harmonization and alternative deployment models are required.

BCG Reports that Emerging market consumers are embracing the mobile web as much more than a purveyor of convenience; they are using it to improve their well-being, intellect and earning ability. However the lack of broadband penetration in emerging countries – especially fixed, but also mobile – is a serious impediment to accruing the benefits of a first class Digital Infrastructure such as the one in Netherlands. This ought to represent an opportunity – many emerging markets are free to adopt new technologies, such as LTE and fibre, without the burden of managing legacy infrastructures. Progress has often been slow, however. India, for example, has struggled to develop digital infrastructure. Fixed broadband reaches less than 10% of households, and while mobile penetration has hovered around 75%, it is dominated by 2G networks; 3G and 4G penetration is less than 5%. There is also a strong urban-rural divide, with mobile penetration in urban areas topping 160% while in rural areas it does not reach 40%.Indian mobile operators struggle with fierce competition, low consumer spending power and poor spectrum management. In Africa the mirror situation is even more pathetic !!

In the digital era, connectivity counts. It is impossible to imagine the country, sector, industry or area of endeavour that cannot benefit from digital services. The services enabled by digital technology are economic growth drivers, job creators, talent magnets and big sources of exports. The economics of many emerging economies make infrastructure (as well as other) investment tough. At the same time, a growing number of governments, companies and organizations recognize the benefits of expanding internet access as widely as possible. They also see that gaining access can have an outsized impact for people who live in particularly poor and remote areas. Bridging this divide may require non-traditional and innovative approaches. Internet.org is a partnership started by a group of major technology companies (the founding partners include Ericsson, Facebook, Mediatek, Nokia, Opera Software, Qualcomm and Samsung) with the goal of working with governments and NGOs to bring basic internet services to people who do not have them. The underlying philosophy is that demonstrating the internet’s value for free will cause users to want to pay for more or better services down the road (which is not too far removed from how internet use evolved in the rest of the world).

The policy-makers of the future ( especially Developing countries ) must be able to tackle the challenges posed by the digital economy. They need to consider the impact of policies on the entire value chain, including telecommunications, digital services and media, and ensure that any regulations that are deemed necessary are applied with a light touch and restraint. Perhaps most importantly, policy-makers need to take into account how quickly technologies and the innovations they enable are evolving.

Perhaps , start learning from the amazing Dutch how they did it in the Netherlands 🙂

Sadiq Malik ( Telco Strategist )

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