Canadian Summit Preview: Q&A with Michael Bucheit, ICE Data Centers on Canadian Opportunity
Michael Bucheit is the CEO of ICE Data Centers. Michael has over 20 years of executive-level experience in developing and managing digital infrastructure in the data center, cloud and communications industries. Prior to his responsibilities at I.C.E Datacenters and Metro Optic, he was Chief Executive Officer of FiberMedia Group, a multi-regional data center provider with 7 data centers in New York, New Jersey, Ohio and London, UK. Prior to FiberMedia, Michael was responsible for corporate development as well as C-Labs at Consonus Technologies, a leading multi-regional data center and IT services provider in the Southeastern and Western US. Michael also spent six years with GE Capital in Stamford, CT, where he built and managed a $70MM IT services business. In preparation for CapRE’s Canadian Digital Transformation & Green Energy Innovation Summit on October 17, we caught up with Michael about what makes the Montréal arena tick, and how it fits into the rest of Canada’s data center game.
CapRE: Thank you for chatting with us, Michael. How have the last three to six months been going? How would you characterize the market in that time?
Bucheit: The market is more active than it was last year. I think that it has to do mostly with general economic growth all around and people having made their decision about how they want to manage the Cloud. And I think that was a prohibitor to growth for some time, especially on the corporate side. I think we’ll see a good growth rate this year. From my perspective it is always a product that has been very close – more than 90% of the business we sign has an element of both colo and connectivity.
That’s really important because that’s what people are looking for they’re looking to either cross-connect to other people or they also need a high-capacity fiber connection. And I think that’s ultimately where I see the trend going right now. It’s both on the interconnection as well on the high capacity fiber side. It supports their corporate goals, to host their apps and be able to move them to their partners, wherever those are, it could be CDNs. The Cloud model inherently is a remote model. So wherever their Cloud is based, that’s where the stuff is moving.
CapRE: How about specifically in Montréal? What’s going on there right now? Why is it unique?
Bucheit: Well, the majority of the Canadian market is Toronto and Montréal. And the fundamental capacity drivers in Montréal are around wholesale data center space.The Toronto market is much more of an enterprise focus and that has to do with the cost structure. Power is a lot more expensive and real estate is more expensive. I think we’re going to see a continued emphasis on Québec and the vast majority of that demand is from outside of Canada.
So you need to market yourself outside of Canada effectively if you’re in the wholesale business. We have to effectively market ourselves to the companies who help those companies come to Québec, the large carriers, that’s to the large Cloud guys. They drive the business.
CapRE: What’s the most exciting trend or opportunity in Edge computing?
Bucheit: I think that with Edge computing, the biggest trend is that there is a trend. There is a trend because so much of the content fits on handheld devices or sits on distributed cloud models. The closer you can be to the user, the better the performance is going to be. And so everyone is building toward that model. The big driver for Edge computing, in Canada, is the migration of 4G to 5G and the ability to support that. That’s where it’s important to be able to support a more distributed data center infrastructure. That’s what we do.
I think that on the opportunity side, we see a model where there is a need for high capacity fiber. And we see that. We see that from the data center operators who realize that the large OTTs need diversified fiber paths. They need new fiber. They need to be able to acquire that capacity at a very competitive price. And most importantly, they need diversity. That drives 70-80% of the market today.
That’s really what excites me. Because that’s where Canada has a huge, huge gap in their offerings. And there are a couple of companies that work on that to ensure that that diversity of connectivity is available. If you don’t have the diversity of connectivity, you don’t have that business.
CapRE: What are you looking forward to most about our upcoming Canadian Digital Transformation & Green Energy Innovation Summit in Montréal next week? Are there any themes or topics you expect to be most central to the panel discussions there?
Bucheit: I think that what is important about Montréal is that it stays a politically neutral market. That’s always been the problem for Québec. And I think that risk is largely mitigated.
Number two is that the continued support from large players like Hydro-Québec is there, so that the wholesale growth of the market can continue. Because what I hear over and over again from large players in the U.S. is that there is no other market that serves, especially the east coast financial centers like New York, Boston and Washington, D.C. as well as a location that’s in a reasonable proximity. Which is Québec. Because you’re 8 milliseconds away from New York. And you can run your compute here at an incredibly attractive cost point.
CapRE: As we look to the future, what challenges or obstacles are you keeping tabs on?
Bucheit: Price competition. There is a lot of inventory being built. And I think that the financial viability of the players who are in the wholesale data center market is a bit at risk, because competition is high and the up-front costs are enormous. The OTTs who drive 60%-80% of their business are extremely price-sensitive. They drive a hard bargain. It’s not necessarily a question of over-supply as it a question of these companies being attractive enough to maintain strong financial support.
CapRE: Finally, in your opinion, what’s the last word on the Montréal data center game?
Bucheit: There is a huge opportunity, broadly, in Canada. Because of the political situation, because there is significant upturn in demand from China, to be located in North America, but not in the U.S. because of the whole problematic trade issue. And the same is true for Europe. So Canada is in a very strong position with close proximity to the US market but they are neutral, politically. And if you can operate there at a good cost-point, it’s a win-win.
That’s what’s exciting and I think that’s the card that should be played. Some want to be on the east coast, some want to be on the west coast, some want to be in Toronto. It just depends on their business model – it’s not just a Québec opportunity, it’s a Canadian opportunity.
Hear more from Michael at CapRE’s Canadian Digital Transformation & Green Energy Innovation Summit on October 17, where he will participate in the 2:45 pm – 3:15 pm panel, “Connectivity & Edge Computing: Analysis of 5G, Micro Data Centers and Other Innovations to Support the Need to be at the Edge.”