Despite the current situation of COVID-19, the demand for data centers has increased. It is one of the few sectors in which the Impact of COVID 19 has been positive as it has started work from home trend where corporates will start hosting most of non-critical applications on the cloud. One can potential consider the data center services industry as an essential industry. The upcoming cloud based data centers are growing at a positive CAGR of above 20%. This growth is expected to continue owing to an underserved market and favourable government policies that support the sector. Edge Data Centers and Cloud based Data Centers can be a game changer in the Industry with Data Localization expected to happen in the coming years.
In conversation with Mr. Shailesh, General Manager, Vodafone Idea India we attempted to seek his opinion and understand his side of story to the changing fortunes of the data center Industry and how are companies gearing up for it.
1.As the data centers shift from a physical data center model to a cloud based model, what kind of changes do the telecom companies have seen or undergone?
Answer: The cloud market is growing due to the government rules that is changing and increase in penetration of OTT. Mobile Penetration is also increasing; thereby we think that there will be a massive growth from the cloud based business. Although a Co-Lo based model is considered more secure, the advent of technology has made cloud based data centers equally secure. Rise in Mobile Internet Penetration and growing possibility of remote working, has made data center more important than ever.
2.There are still few data centers that are not carrier neutral. Will they be able to sustain in the market?
Answer: According to me, most of the data centers in India are Carrier Neutral. But if there are some data centers which are still not carrier neutral, they may have to adapt or they will not sustain in the long run. Primary reason for this is the flexibility offered to the customers. Customers prefer having more options, which will lack if you stick to one network provider.
3.How do customers choose a telecom partner? Does it depend on the Data Center?
Answer: The pricing in the Industry is more or less the same. It depends on the type of data center and the need or requirements of the customers. One more factor is the strategic partnership that you have with the Data center that is selected. So it actually depends on the combination of these factors. The kind of service, connectivity, speed of the network etc, everything matters in finally a client being satisfied with a Telecom provider.
4.Every telecom for extension of their existing fibre optic networks has to invest a lot of capital. What would be the average CAPEX invested in extending fibre optic cable on a per km basis?
Answer: Ah! In Metro’s, this would run in Crores. It is an expensive fibre. So if you are considering a new location, if the fibre optic cable is already laid, then it is easier, otherwise due to the cost it becomes difficult and the investment is then unattractive for the telecom providers unless the size of the data center is huge. If the fibre optic cable is not laid, then the municipal corporation charges around 1-2 crore per km. If the cable is already laid then the cost depends on where the fibre optic node is located.
5.How do you think the Data center Industry will transform in the future? Especially for a city like Mumbai?
Answer: I think the next wave will happen in Tier II cities, where government contracts are much higher, and thereby increasing demand. Closer cities such as Thane would develop, since the cost is lesser as compared to Mumbai. With regards to places such as Bhiwandi are too far off and I don’t think it will fly too much. The OTT Growth in the Market will be the most important catalyst for the Data Center Market.
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