SOMETIMES “ENOUGH” IS NOT ENOUGH

Singapore May Be Able to Square the Data Centre Growth Circle Sustainably, But it Cannot Offer Sufficient Diversity

BY NIGEL PARNELL & EDITED BY JULIAN RAWLE WITH CONTRIBUTIONS FROM JOHN MURRAY

Over the last sixty years, Singapore’s geographical position, its free and open market economy, its stable government, and market-oriented regulatory environment has under-pinned a remarkable transformation of this small city state into the region’s richest commercial hub and home to the regional headquarters of many multinational organisations. However, the irresistible rise of Information Communications Technology as a core component of global commerce has brought the city state’s pre-eminence as an ICT hub into question as Singapore faces significant challenges from within and without.

Although Singapore has by far the highest GDP per capita in the region, since the end of the pandemic, the country’s GDP growth is lagging behind its neighbours, especially Indonesia, Philippines, Malaysia, Cambodia, and Vietnam. This reflects the physical constraints, such as population size and land mass, that Singapore faces. Eventually, logistics, space, human capital capabilities, and costs of doing business in Singapore will become either saturated and/or cost prohibitive. By this time, Singapore will need to have re-positioned and reinvented itself.

Moreover, when we focus down on the requirements of the ICT community, two key requirements have become so important that they are overriding other considerations. Those are Sustainability and Diversity.

In the last fifteen years, Hyperscalers have become highly influential, not only in the design and development of transmission networks, such as the existing 25 and planned 14 international submarine fibre-optic systems landing in Singapore, but also in defining data centre business strategies.

According to Cloudscene, there are 100 data centres in Singapore, providing a variety of capabilities that include Managed Cloud, Hosting, Co-location, and Connectivity Services.

Meta, Google, Amazon Web Services, and Microsoft, not to mention the upcoming content providers like Alibaba, Huawei, and Tencent, require a different type of data centre infrastructure to meet their requirements for Cloud, Content Distribution, and in the future, Artificial Intelligence-driven services. These kinds of services require 100% up-time and have led to the creation of “Availability Zones” where multiple, physically diverse data centres are connected via a meshed network of data transmission lines. Under this evolving scenario, Singapore cannot remain a single-source provider of either interconnectivity or data storage and processing power.

The major Hyperscalers have sustainability embedded in every aspect of their corporate policies, business strategies, and day-to-day operations. For example, AWS contract for “renewable power from utility-scale wind and solar projects that add clean energy to the grid”; Microsoft is “accelerating work to set business-group specific annual carbon intensity targets based on fundamental business drivers”; Google is “harnessing next-generation geothermal energy or implementing carbon-intelligent computing with the aim of being “the first major company to operate on 24/7 carbon-free energy by 2030”; and Meta is “championing renewable energy, engaging our suppliers, and boosting energy and water efficiency in our data centres”. The growing trend towards incorporating sustainability into business practices is going to be an increasing challenge for the limited resources available in Singapore.

The first outward sign that these challenges were having an impact appeared in 2019 when the Singapore Government imposed a moratorium on data centre construction, due to concerns over the ability to maintain sufficient power generation for the island and the environmental impact. According to Forrester, Singapore’s contribution to global carbon emissions is over 200 times greater than the percentage of its land area among global territories. Data centres alone currently account for around 7% of the island’s electricity consumption and are forecast to consume more that 12% by 2030.

SOLAR ALONE WON’T DO IT

By the admission of the Prime Minister’s own National Climate Change Secretariat, “With the limited renewable energy options available to us and the current technological capabilities, we are not able to generate sufficient baseload electricity from renewable sources reliably for Singapore”. Only solar power generation is considered to be worthwhile developing here but even taking into account various initiatives to promote this alternative power source, the Government expects that solar will still only contribute 2 GW by 2030 or around 3% of the total forecast requirement.

The importation of clean power from regional grids is part of Singapore’s plans to address the power crunch. However, the developer of the high-profile “Sun Cable” project, which was envisaged to supply 15% of Singapore’s energy needs with power from Australia has gone into Financial Administration. A less ambitious RFQ has recently been issued to import power from Malaysia.

Source: Our World in Data

The Data Centre Moratorium has now been lifted and replaced by a government-controlled series of tenders for additional data centre capacity which has spawned some interesting initiatives to create what is known as “Singapore Plus”, a virtual data centre campus that extends into the State of Johor in Malaysia and onto Batam Island in Indonesia, with attendant submarine fibre-optic cables to mesh this additional data centre capacity into the Singapore eco-system.

Some take the view that the Moratorium gave the Government breathing space to generate new ideas to address the sustainability issues around an expanding data centre industry, but new initiatives so far are merely scratching at the surface. This dismal view is compounded by that fact that data centres in tropical Singapore require large amounts of water, another scarce and ecologically sensitive resource, to keep the servers cool.

Others speculate that the Moratorium was lifted because of competition arising from the improvement in conditions for data centre development in other parts of South-East Asia, especially Indonesia, Malaysia, and the Philippines. In response, the Singapore Sovereign wealth fund, GIC, has also recently entered into a partnership with data centre provider, Polymer Connected, to build a hyperscale data centre campus in Jakarta, and SingTel continues to extend its data centre capacity and capability with strategic investments, alliances, and partnerships in data centres across Asia.

In September 2021, Meta announced that it had chosen Singapore as the site of its first billion-dollar data centre in Asia, with an 11-storey, 170,000 square metre (1.8 million square feet) structure in the industrial district of Jurong East, slated to be operational in 2022. However, in December 2022, Data Centre Frontier reported that Meta “is pausing construction to “rescope” a number of its projects.” As of publication date for this article, there is no public announcement that the Singapore project has been completed.

Providing physical diversity for both data centres and the submarine cables that serve them is also a challenge for Singapore. With a territory of just 709 sq. Km, Singapore is smaller than New York City. Land reclamation, for which Singapore is famed, is limited in what it can achieve.

Limited Scope For Zoning Changes

For Singapore to significantly expand its current economic capabilities, use of prime recreational and open spaces will be required. In Singapore’s most recent Long Term Plan Review, the Urban Redevelopment Authority (UDA) conceptualised blurring the boundaries between where people work and where they live, shop, and dine. This would contradict the Singapore Government’s stated aims in its “Green Plan 2030”. In the first half of 2023, it is expected that the government will offer a 6.8-hectare site near Jurong Lake as the beginning of development for a second CBD. However, as of the end of April 2023, there is no indication of when this offer will be made available.

Singapore is still able to attract human resources to its hi-tech sector. According to recent Government data, about 75% of the workforce is in service industries that include telecoms and IT. However, the required expansion of infrastructure that includes housing, health care, education, sanitation, service infrastructure, transport etc. to support economic growth is already bumping up against the drive for sustainability in growth.

Geo-political tensions, particularly in this case, between China and the West, led by the United States, have spilled over into trade wars and concerns over cybersecurity and human rights. At first, this appeared to favour Singapore as Hong Kong’s lustre as a digital hub quickly faded but the constraints on Singapore’s growth described above have played into the Hyperscalers’ desire for greater physical diversity in Asian markets.

Cable Developers Hedging Their Bets

There are ten major transpacific or intra-Asian submarine fibre-optic systems planned to be RFS by 2025. One or more hyperscalers are participating in five of these projects. All but one (“Topaz”) are slated to land in Singapore but six of these (“ADC”, “Apricot”, “Bifrost”, “CAP-1”, SEA-H2X, & “ALC”) will also land in the Philippines. Of those six, Apricot and Bifrost will include a landing in Indonesia which will also see “Echo” and “SEA-ME-WE-6” landing there.

According to Arizton’s most recent research report, the development of the Philippines data centre market has gained significant traction in recent years. Manila is the most popular site for data centre operators, with 12 distinct third-party data centre facilities, making up more than 75% of the country’s current power capacity. PLDT is planning an increase in data centre power capacity from 34 to 62 megawatts by 2024. Other investments include Digital Edge’s 10MW “NARRA1” data centre; a “green” data

Meta Singapore; Indonesia; Palau (BU); USA

ADC CTG, National Telecom, CU, PLDT, Singtel, Softbank, Tata, Viettel Singapore; Malaysia; Thailand (BU); Vietnam (BU); Philippines (BU); PRC; Japan

Topaz Google Canada; Japan

Apricot Google, Meta, PLDT, Chunghwa Telecom, NTT Singapore; Indonesia; Thailand; Cambodia; Vietnam; Philippines; Taiwan; PRC; Korea; Japan; Guam, USA

Bifrost Keppel T&T, Google, Meta, Telin, Converge USA; Philippines; Indonesia; Singapore

CAP-1 CMI, Converge, Meta, AWS Singapore; Philippines; USA

SEA-H2X CMI, CU, Converge, PPTel PRC; Philippines (BU2); Thailand (BU5); Malaysia; Singapore

ALC CTG, Globe Telecom, Dito, SingTel, UNN PRC; Philippines; Brunei; Singapore

SEA-MEWE-6

SingTel, Batelco, Bharti Airtel, STC, BSCCL, SLT, Orange, Dhiraagu, Djibouti Telecom, Mobily, TE, Telin, TM, TWA

France; Italy; Greece; Turkey; Egypt; KSA; Djibouti; Yemen; Qatar; Bahrain; UAE; Oman; Pakistan; India; Maldives; Sri Lanka; Bangladesh; Myanmar; Thailand; Malaysia; Singapore; Indonesia 2025

SJC-2

CMI, Chuan Wei, Chunghwa Telecom, Meta, KDDI, Singtel, SK Broadband, VNPT, Telin

Singapore; Thailand (BU); Cambodia (BU); Vietnam (BU); Taiwan (2 BUs); PRC (BU); Korea (BU); Japan (2, 1BU) centre, entirely powered by geothermal and wind energy; the 72MW “MNL1” which will be the largest hyperscale data centre campus in the Philippines; and investments by Alibaba, Aboitiz InfraCapital, and Edge Connex.

Regional Data Centres

Indonesia has seen a rapid growth in postCOVID start-ups, along with exponential growth in take-up of digital services by a growing population, resulting in new demand for hyperscale data centres.

Government initiatives are further accelerating the growth in demand for digital infrastructure and greater connectivity across the archipelago. A feasibility study for Indonesia’s first national data centre project has received US$190M in funding from the French Government.

NTT already has three data centres in Jakarta, Indonesia and, in October 2022, Equinix announced expansion plans in Indonesia costing US$74 million. Furthermore, the Indonesian and Singapore Governments are working hard to develop the “Nongsa Digital Park” as a special zone and major hub for data centres on Batam Island. Around twenty data centre operators are said to be looking at the possibility of launching operations there.

Telin, is also committed to developing a second data hub in Kalimantan, where the new capital is planned to be located.

Despite the fact that Singapore manages to maintain political neutrality and other South-East Asian countries are not yet fully developed competitors, one can see from this breakdown of cable and data centre developments that the hyperscalers and other major regional data centre operators are spreading their bets.

For now, Singapore remains as the premier data centre hub and location of choice in the SEA region, but the geo-political, commercial, and purely geographical reasons for Singapore’s ICT premier hub status are being supplanted or supplemented by other considerations, mainly related to the nature of the market demands that are evolving as a result of technological advances.

As applications, such as Artificial Intelligence, Virtual and Augmented Reality, and Machine-to-Machine become more sophisticated and move into a meshed Cloud, the data centres of the future will be on a scale that is, today, almost unimaginable. This trend will require, not only more submarine fibre-optic cables with greater throughput, but also space and power to drive the servers and keep the data centres cool. Singapore is simply incapable of meeting these physical demands with the land and power generation resources that it has.

Singapore is further constrained by the global push for sustainable solutions to all of society’s issues. To make matters worse in the ICT sector, the main drivers of data centre growth, the hyperscalers, have a vision of availability zones with a meshed network of physically diverse data centres.

The answers to this dilemma for Singapore lie, not in defending its current position with worthy but inadequate measures to address land use and sustainable power generation, but in recognising the virtual nature of the ICT sector going forward. Singaporean financial and human capital can be deployed usefully and profitably in other geographies to maintain the island nation’s status as a major regional player but within a much larger arena which affords better access to resources that are sustainable and provides the physical diversity required to ensure as close to 100% network and service availability as possible.

There is no chance that Singapore will fade away as a centre for economic activity, but it must adapt to the changes that are occurring in the political, social, economic, and technological environments and find a modified role which transcends its physical limitations. STF

NIGEL PARNELL is an experienced telcoms executive, a career that started in Cable & Wireless, initially trained as an Engineer he left as an Executive and Board Member and graduated from Harvard Business School in 1994 in Business Management and Development. His career took him globally from Australia to Canada, Europe to India and the Far East with periods living and working in Bahrain, Mauritius, Yemen, Maldives, Bermuda, Antigua, Japan and Trinidad and Tobago. His final role before leaving C&W was Vice President International Submarine and Satellite Services.

After leaving C&W he joined Nortel and continued with a global role, followed by jobs with Alcatel Lucent, Nokia and his final “Corporate Role” was with T-Systems.

Post 2013 he formed his own consultancy company specialising in “Complex Operational Management” working with a broad spectrum of companies that included, Barclays Bank, Alcatel Lucent, DSM and Nokia. His private life he is Private Pilot with single, Multi Engine and aerobatics ratings, qualified Rugby coach and referee, and enjoys both Clay Pigeon and Long-Range target shooting,

Living in rural Oxfordshire he enjoys the country life, walking with his three dogs, fishing, managing a large garden. Locally he is involved in the local community as Chair of both the Village Hall and Parish Council

JULIAN RAWLE possesses 23 years’ experience in the submarine fiber optic industry, together with a business development track record in emerging markets going back to 1990. He developed several new businesses in countries of the former Soviet Union, latterly with Cable & Wireless. Went on to lead international marketing efforts for Japanese marine installer, NTTWEM, before joining Pioneer Consulting. He acquired Pioneer and transformed the business into a leading centre for submarine expertise. Successfully supported the Main One (Nigeria-Portugal) private submarine cable project and Brazilian investment bank, BTG Pactual, in acquiring GlobeNet (Brazil-US) submarine cable. Operating independently since 2014, long-term projects have included working with Campana on the SIGMAR submarine cable between Myanmar and Singapore, supporting Oman Broadband’s entry into the international carrier market, and helping Gulf Bridge International to analyse options for new routes. Currently working with Mitsui on various cable infrastructure projects and supporting the Government of Turks & Caicos with a cable feasibility study.

JOHN MURRAY is a Global ‘C’ level Executive with a demonstrated history of managing people and operations in Asia, China and the USA in the telecommunications industry much of it with Cable & Wireless plc. A career that has developed through operational, marketing and financial management to Chief Executive level encompassing Broadband, Mobile, International Business, Wholesale Carrier and Submarine Cable Systems including a few start-ups in Houston and Beijing. Now working as a consultant to Submarine Cable operators and Private Equity firms where I can provide an unusually broad wealth of operational insight, vision and marketing experience.