[+] Darwin to the World: Top End Positions as APAC Data Capital

Darwin, the country’s most northern capital city and by definition one of the most isolated, is about to become Australia’s gateway to the world. Digitally speaking, at least. The world’s biggest technology and communications companies have discovered the very geography that has defined the former frontier outpost is in the 21st century one of the city’s greatest assets. By most estimations there are currently about 250 data centres—completed or in various stages of planning and construction—across Australia, with Sydney (and regional New South Wales) hosting about 80 of them. Melbourne counts about 50. Darwin has just two. Both still under construction. But the Northern Territory government is confident that is about to radically change. Belief began in earnest about a year ago when the final link in a subsea cable was laid, directly connecting Darwin to a global network of high-capacity telecommunications cables for the first time. Vocus—a 50-50 joint venture between Macquarie Asset Management and Aware Super—installed the 1000km stretch linking its existing North-West Cable System running from Port Hedland to Darwin, and its Perth-based Australia-Singapore Cable. “All digital highways lead into or through Darwin and that will equal jobs of the future, while growing our digital industry,” the then-Chief Minister of the Northern Territory Natasha Fyles said at the time. ▲ The cable-laying ship Ile De Re delivering part of the DJSC telecommunications link. Top image: The giant rotating cable drums on the ship used to dispense the cable. Home-grown, Brisbane-based and publicly traded data centre operator NextDC goes further than that. “Darwin is located within 50 milliseconds to more than 500 million people and offers a secure and stable location for digital, data, technology and telecommunication companies to start-up, relocate or expand their operations…” the company wrote. Little wonder then that in November, 2021 NextDC paid a reported $4.5 million for a 1390sq m site in Darwin’s inner north. The company’s D1 data centre, a hyper-scale facility with 3000sq m of technical space and an 8MW capacity, is expected to complete by the end of this year. Vocus, which markets itself as a specialist infrastructure provider, boasts Australia’s second biggest fibre-optic footprint. In effect that makes it a key enabler of data centre positioning in Australia. Head of strategic projects, enterprise and government Simon Parker says Darwin had the key elements for setting up a data centre hub, including available land, relatively affordable power and sovereign and cyber protection. But, he says, it was hamstrung by a lack of access to high-capacity communications that can be delivered in a diverse configuration. “Now Darwin can do all of those things,” he told The Urban Developer . “And it has a specific geographic advantage in that it offers a low latency path to markets in South-East Asia.” Latency is the delay in network communication, or the time that data takes to transfer across the network. Speed is everything with data. And distance affects speed. ▲ NextDC’s hyper-scale Darwin facility is expected to complete later this year. Vocus’s Darwin-Jakarta-Singapore Cable (DJSC) means latency from the Northern Territory capital to South-East Asia could be 2.4 times faster than from Sydney and 1.2 times faster than from Perth. That’s not lost on the NT government, which in 2019 began fielding calls—from Australia and abroad—from those suddenly wanting to talk about digital cables and data centres. The government commissioned a study that confirmed what it was beginning to understand—like it or not, Darwin was suddenly at the centre of Asia-Pacific data digital discussions. Chris Mouat is a senior director with Investment Territory, a government agency overseeing investment and major projects. “We went to a number of big, digital conferences in Australia, Singapore … in the United States … a big one held in Hawaii every year, maybe 8000 people attending,” he says. “And we were stunned at the number of large, significant companies who were doing presentations before all these people, with Darwin on the map. “And these were people who had never even been to Australia.” A year later Vocus and the Territory government formed a partnership known as Terabit Territory, whereby the telecommunications provider agreed to upgrade the Territory’s existing fibre optic cable from 400 gigabits to 20 terabits. ▲ Cushman and Wakefield’s Moffatt, Vocus’s Parker and the Northern Territory government’s Mouat. As part of that deal the government sank $7.9 million into upgrades to the Vocus data link between Darwin and Adelaide. “So, they made a contribution to the electronic and power upgrades that we needed on those links to the south,” Parker says. “And in return Vocus offered to drop its pricing to hyper-scale data centre operators to effectively zone one pricing, which is the same pricing structure that we offer on the east coast between markets like Sydney and Melbourne.” Parker won’t reveal the precise discounts offered, other than to say, “it was a substantial drop”. But as a result, NextDC and DCI Data Centres—the Brookfield Asset Management-backed owner and operator—announced their intention to build facilities in Darwin. “Because that was effectively the last piece in the jigsaw,” Parker says. The NT government’s first priority is data connectivity for a local audience. Investment Territory’s Mouat points to pastoralists running huge farms in the Top End who are monitoring cattle movements with drones. And the mining industry. Of Australia’s roughly 340 mines, about half are in North-Western Australia, Northern Territory and Queensland. Autonomous mining vehicles are being driven from offices in Perth and Adelaide. Why can’t those trucks be driven from Darwin, asks Mouat. ▲ Darwin: Suddenly appearing on everyone’s map. Or remote education. “Clearly, we need to close the gap in terms of digital connectivity for remote communities,” says Mouat. “To ensure their educational standards are as much as possible equivalent to what you get in the major centres.” The rise and rise of Artificial Intelligence (AI) has fuelled explosive growth in data centres, here and abroad. Parker describes the multiples around data facilities as “eye-watering”, saying it’s all being driven by four or five companies. And, he says, “they are all looking at Darwin”. He’s referring to cloud service providers—those that rent out a combination of technology, infrastructure like online storage, and expertise. Amazon Web Services, Microsoft Azure and Google Cloud Platform control about 66 per cent of the market, according to the Synergy Research Group. Just last week, the Albanese Government announced it will invest at least $2 billion over the next decade to bolster Australia’s cyber capabilities via a partnership between Amazon and the intelligence agency, the Australian Signals Directorate. Amazon Web Services will deliver purpose-built, top-secret cloud storage to host the country’s most sensitive information. “So these [developments] provide a very solid backbone for energy use and grid stability, which is very important to us with a low population base,” Mouat says. ▲ Autonomous mining vehicles—the Northern Territory government thinks they can be operated from Darwin. “But it also starts showing us there are companies out there for whom low latency is important.” Like online gaming and e-sports. The in-depth market research group Market.US estimates the global online gaming market will be worth around $407 billion in the next 10 years, a nearly three-fold increase on today. Asia-Pacific has about 48 per cent of that share, driven by a deep-rooted gaming culture. In fact, Mouat believes Darwin can be the centre of the online gaming industry in Australia. “We’ve got companies sitting here already, employing 30, 40, 50 people in the online gaming sector, and they’ve clearly said they could increase that.” But the Northern Territory’s real target is Singapore. The island state boasts a highly-developed mixed-market economy, consistently ranked as the most open and pro-business in the world. With more than 70 facilities, it has long been a data centre hub for Asia-Pacific. ▲ Singapore, with its shortage of land and renewable energy, is the real target. But at 750sq km, or about 1/16th the size of Sydney’s CBD, Singapore has little spare land, and already an estimated 7 per cent of its 1.4GW power capacity is used by data centres. Cushman and Wakefield’s director of tenant advisory Alex Moffatt says Singapore is trying to solve its problems across the 900m-wide Straits of Johor—that narrow stretch of water that separates Singapore from Malaysia. “What we’ve seen over 2023 particularly was the acquisition of sites in Malaysia, in the order of 300 acres (121ha), mainly in Johor Bahru,” Moffatt says. “Because they effectively picked that part of Malaysia that was closest to Singapore. It’s got a cable connection with five-millisecond latency, so, it’s nearly as good as being in Singapore.” But, he says, Malaysia’s power capacity in terms of existing generation is going to start reaching its limits. “There’s only so much power they can get from a coal baseload in Malaysia without building another power station.” Darwin and the Northern Territory, argues Mouat, has plenty of power. He points to the Beetaloo Sub-Basin, a gas reserve 500km south-east of Darwin. The field is estimated to contain at least 500 trillion cubic feet of gas, or the equivalent of more than 1000 times Australia’s current annual domestic consumption. ▲ Vocus boasts the country’s second biggest fibre optic footprint. A new 1000km subsea connection has put Darwin on the network map. “We’ve got one of the largest gas fields in the world that is well advanced and will start generating gas hopefully next year.” And there’s SunCable, owned by a consortium led by Grok Ventures, which is planning the world’s biggest integrated renewable energy zone, also in the middle of the Territory, on Powell Creek in the Barkly region. “Energy is not an issue,” says Mouat. At least two additional subsea cables are expected to be operational by 2026—both via Darwin. But consider this, says Vocus’s Parker. In March this year marine engineers GHD filed survey submissions on behalf of SubCom LLC for the east and west coasts of Australia. ▲ Fibre-optic cable waiting to be delivered to 2.5km below the surface. According to plans for the West Australian marine route survey, SubCom—the New Jersey based firm that designs, manufactures and deploys subsea cables—is looking to land five cables on Christmas Island, the 135sq km Australian territory 1550km from the mainland. One cable links Darwin, another links Perth and a third goes north towards Indonesia. Two more head west, in the general direction of India—the world’s most populous country, and the fifth biggest economy. It is not clear who is the end-customer, but SubCom has reportedly partnered with Google in the past. “The implications of this are big,” says Parker. “If it’s Google, then you can be assured that Meta, Amazon, Microsoft, etc will be following. “And that puts Darwin right in the middle of a huge global network.” You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Darwin to the World: Top End Positions as APAC Data Capital

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