Investors Eye Chile’s New Fiber Optic Network

By: Jacqueline Lee| - Leave a comment


As Chile considers adding new undersea fiber optic cabling to expand its network to China and south to Patagonia, potential investors are taking notice. Two big players, Amazon and Google, have taken significant interest in the expansion.

According to U.S. News & World Report, the project contract, scheduled to be awarded in September, will be supplemented by as much as $96 million in Chilean government subsidies. Tech companies that want to build data centers in the region have interest not only in the network infrastructure investment but also in Chile’s cooler climate.

Cooler Surroundings, Lower Costs

From building data centers in abandoned mines to putting them in giant cartons and submerging them beneath the ocean, businesses are exploring innovative ways to slash data center cooling costs. According to Data Center Knowledge, in the U.S. alone, data centers use 70 billion kilowatt-hours of energy per year, or about 2 percent of the nation’s energy consumption. This quantity is equal to the power consumed by 6.4 million average American homes.

However, data center power consumption increased just 4 percent from 2010 to 2014, Data Center Knowledge reports. This represents a significant slowdown from prior periods — consumption grew 24 percent between 2006 and 2010 and 90 percent between 2001 and 2005. The biggest factor in this lower power usage has been increased energy efficiency, accomplished by tackling the data center’s two largest cost categories: operations and climate control.

In many data centers, operations costs have been significantly reduced by virtualization of data center workloads. Virtualized network and server functions can consolidate workloads, enabling administrators to offer more services with less hardware. Plus, less hardware generates less heat, making it cheaper to cool the data center environment.

Additionally, smaller data centers can be consolidated into bigger ones, achieving even greater economies of scale. Businesses that can invest in large data centers — like Amazon, Google and others — gain a significant long-term advantage in the hyperscale public cloud market, and innovative cooling practices only make it easier for these facilities to be profitable. In a data center larger than 50,000 square feet, 1 kWh of IT capacity costs $5,467, Data Center Knowledge reports; in a data center between 500 and 5,000 square feet, the same amount of functionality costs $26,495.

Chile’s Fiber Optic Future

Although Chile is one of the most developed South American countries, its current telecommunication infrastructure isn’t sufficient to support further growth. The country’s willingness to invest in expanding its fiber optic network makes it an attractive option for businesses looking for a strong and stable home in Latin America.

Amazon, for instance, already has data centers in Brazil, but the online retail and cloud giant has an eye on Chile’s more temperate climate — both in terms of weather and political stability. Brazil’s government faces significant constitutional challenges, according to the Los Angeles Times, with the impeachment of former President Dilma Rousseff in 2016 and the corruption scandal currently surrounding President Michel Temer.

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About The Author

Jacqueline Lee

Freelance Writer

Jacqueline Lee specializes in business and technology writing, drawing on over 10 years of experience in business, management and entrepreneurship. Currently, she blogs for HireVue and IBM, and her work on behalf of client brands has appeared in Huffington Post, Forbes, Entrepreneur and Inc. Magazine. In addition to writing, Jackie works as a social media manager and freelance editor. She's a member of the American Copy Editors Society and is completing a certificate in editing from the Poynter Institute.

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