EU’s Digital Beating Heart
In digital, borders are more blurred than in the physical world. In Luxembourg, the nation’s digital economy is open and ready to help others at government and enterprise level bulk up on their digital strategies through a wide range of initiatives that have seen the country move up the hosting ranks in recent years.
In 2006 the Luxembourg Government identified the expansion of the country’s data centre fleet as an objective to develop ICT services in the Grand Duchy.
A year later, the cabinet set up the backbone for what it is today an established data centre hub within the Luxembourgish border.
It was on that day that LuxConnect, a Luxembourgish collocation player backed by the government, was launched.
Having gone from the steel industry to the financial and satellite business roadmaps in the 1970s, Luxembourg is today one of the most attractive markets in Europe for digital.
According to consulting company BroadGroup’s “Datacentres Luxembourg” market report, Luxembourg accounts to over 600,000 sqf of data centre raised floor space and up to 85.4 MW of data centre customer power (DCCP) in total available as of the end of 2016 – with 19 third party facilities, some offering wholesale.
LuxConnect is one of the major players in the market, however, other companies like Data4, Datacenter Luxembourg, Sungard SA, Verizon Luxembourg, ebrc, Etix Everywhere, and others also represent a large share of the market.
Some of the world’s leading tech brands, including PayPal, Amazon, Microsoft, eBay, and Skype have all established their European HQ in Luxembourg, and recent reports of Google planning the construction of a $1bn data centre in the country have sparked interest in Luxembourg to a new level, making this one of the EU’s digital beating hearts.
In the next pages, Luxembourgish data leaders open up on the booming national hosting sector and what’s next for the country.
Antoine Boniface, CEO, Luxembourg-based Etix Everywhere talks from financial to digital gateway, how data centres changed Luxembourg.
Luxembourg has for years been seen as a financial destination, how are data centres challenging that view?
Luxembourg has for years been seen as a financial destination, but the Luxembourgish government also strongly encouraged the development of the data centre industry over the last 10 years.
As a result, the country is recognised for its data centre expertise and for its quality of infrastructure.
Luxembourg hosts 40% of Europe’s Tier IV data centres, according to Luxembourg for Finance.
Luxembourg is the second largest investment hub in the world.
Today, financial institutions are increasingly turning to IoT, Crypto-Currency, Blockchain and HPC, and will require more and more IT capacity.
They will need a fast and secure access to their data, so they will tend to bring their data closer to them.
The demand for edge data centres is going to boom in Luxembourg.
Furthermore, due to Brexit, companies are looking for data centres within the European Union.
Luxembourg benefits from its central location in Europe with a direct access to 500 million of potential consumers.
How has investment within the Luxembourgish data centre market changed in recent years and what is next for Luxembourg?
Luxembourg is becoming a strategic destination for the data centre industry attracting more big players.
The country is recognised as one of the “Top 10” best locations where to invest in data centres.
ICT has a growing role in the Luxembourgish economy, actively supported by the government.
Since 2014, Luxembourg has implemented ‘Digital Lëtzeburg’ initiative aiming to strengthen ICT industry, to support the digital transformation of the country and to become a substantial player in the data market.
Research in IT has been stated as national priority and the authorities offer attractive conditions for R&D investment.
What is Etix preparing for the near future?
Etix Group has recently announced a major capital increase from SBI Crypto Investment, a wholly-owned subsidiary of SBI Holdings.
We will use the proceeds to accelerate the expansion of our global network of colocation data centres.
We already have infrastructures in France, Belgium and Morocco, and are currently building new data centres in Brazil, Ghana and Sweden.
We also have more than 10 projects ready to be built that will now progress more rapidly.
Our ambition is to support our customers in their global expansion by providing them IT capacity wherever they need it.
Roger Lampach, CEO, LuxConnect
How are data centres helping to re-shape Luxembourg’s image outside Luxembourg?
Luxembourg is actively promoting itself as a technology hub in the centre of Europe, located as it is between all of the major capitals.
We have many conferences and exhibitions to assist in this regard (such as ICT Spring).
Our Government is very proactive supporting the ICT sector and Digital Luxembourg, the name behind Luxembourg’s digitalization movement, get promising projects off the ground.
Our data centres are ‘state of the art’ to set a benchmark as to how seriously we take the sector.
All our data centres are supplied with green and low-price electricity.
So we also invest significantly in ‘green’ technology’ such as the unique biomass KioWatt plant cooling our data centre in Bissen.
What’s next for Luxembourg?
Luxembourg has many initiatives in the Fintech and Technology sectors in order to be considered as one of the main players.
The Luxembourg government has always had the ability to consider radical sectors before they were mainstream, we were the first satellite broadcaster and now we are looking at space mining.
Luxembourg, the Digital Nation, started building dark fibre infrastructure and data centres over 10 years ago to attract international companies requiring high specification server space and great connectivity.
What is LuxConnect preparing for the near future?
We will continue to promote our unique ‘multi -tier’ offering and very recently DC1.
3 has been certified Tier III in addition of the Uptime certified Tier ll and lV in the same facility.
Insurance companies and others are setting up offices in Luxembourg (because of Brexit uncertainty) so we will assist them with server hosting via our Partners.
We are encouraging UK based Managed Service Providers and colo operators to have a foothold in the EU using our data centres and US colo operators with no presence in Europe to do the same.
Frankfurt is on our doorstep (3.5ms rt) so we feel we can attract Disaster Recovery solutions from the operators there or their clients.
As our power costs are significantly lower than Germany we are looking for ‘overspill’ from Frankfurt from the automotive sector, cloud providers and others there and in the rest of Germany.
The new GDPR regulations might help in that regard.
Projects such as “Open Compute Project” and HPC are in the scope of LuxConnect for the near future.
Nicolas Mackel, CEO, Luxembourg for Finance
How is technology and especially the gov’ts drive to install data centres, helping to contribute to the shift in perception that Luxembourg is much more than just a financial destination?
The shift to the digital era is a major priority for Luxembourg.
The country has positioned itself as a leading digital hub for a range of industries such as Cleantech, Logistics, Automotive, ICT, Space and Finance with worldclass infrastructure including as datacentres, where the country can offer the largest density of Tier IV data centres in Europe.
As an example, the government of Estonia chose Luxembourg to open its e-embassy, the first of its kind worldwide, hosting Estonia’s most critical and confidential data.
Other international institutions such as NATO, the European Patent Office, as well as numerous international financial institutions trust Luxembourg to store their critical data.
Being at the centre of the “Golden Internet Ring”, Luxembourg is connected with major European cities and financial centres through 28 fibre routes with ultra-low latency and an average round-trip times of c. 5 milliseconds.
The country ranks 1st for technological readiness worldwide (Global Competitiveness Report, The World Economic Forum 2015); 1st globally for international bandwidth and laws relating to ICTs, 2nd for intellectual property protection (2016 Network Readiness Index of World Economic Forum); 5th in Europe in the Digital Economy and Society Index 2018 as one of the leading countries for connectivity, digital skills and Internet usage.
These are key advantages for the positioning of the financial centre in the digital era.
Beyond infrastructure, Luxembourg focuses on R&D capabilities with renown and industry focused research institutions such as the Luxembourg Institute of Science and Technology (LIST) and University of Luxembourg’s interdisciplinary centre for Security, Reliability and Trust (SnT).
The latter leads research projects with international financial players such as PayPal, Clearstream, BGL BNP Paribas and the Luxembourg Stock Exchange.
This underlines the link between public research, ICT infrastructure and the financial centre in Luxembourg.
What in your opinion will be the main drivers for Luxembourg in the coming years?
Luxembourg is aiming to establish itself as a leader in the digitalisation of key areas.
Fintech is one of them.
Luxembourg offers ideal conditions for FinTech companies to develop their services and products and expand their business to reach a European customer base.
On top of this, Luxembourg’s international financial centre provides a significant local market for FinTechs to launch new products in a secure environment.
Luxembourg’s open and responsive approach to regulating FinTechs under European passport provisions means that these innovative new companies can conduct business on an EU-wide level from a single base.
At present, leading companies, such as Rakuten, Ebay, Amazon, Daimler or PayPal are serving the European Union from Luxembourg.
Several projects have been initiated to further digitalise such as FundsDLT and Fundchain, two distributed ledger solutions for asset management, an industry in which Luxembourg ranks globally #2.
The European High-Performance Computing (HPC) project more infrastructure-driven project, where Luxembourg acts as headquarter.
As part of the European Commission’s Horizon 2020 program, the HPC project will be a strategic resource for Europe’s future as it allows researchers to study and understand complex phenomena while allowing policy makers to make better decisions and enabling industry to innovate in products and services, in areas such as fintech.