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Thursday, 10 May 2012 16:41

Carbon tax won't slow cloud: Pacnet

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Regional ICT specialist Pacnet is more than quadrupling the size of its CloudSpace1 data centre in Sydney, apparently unfazed by the likely impact of the carbon tax and resulting electricity price rises estimated to be as high as 16 per cent.

During a visit to Sydney today Bill Barney, Pacnet’s chief executive officer, said that the carbon tax was likely to in fact make organisations more efficient, which was a good thing, and would “not fundamentally change the economy of the business.”

Pacnet is spending $32 million upgrading its 200 rack data centre in Sydney and adding a further 700 racks taking it to a 3 MW Tier III facility. The company says its clients in the cloud hosting data centre are all under non-disclosure agreements but are mainly in the technology, new media and gaming sectors.

Although Pacnet takes all its power off the electricity grid, being unconvinced of the benefits of co-generation in a CBD setting, Mr Barney did not believe rising electricity costs would impact the company’s business model in Australia. “It won’t move the meter that much” he said.

However he did question whether Australia’s unilateral approach with a carbon tax would place the country at a disadvantage when trying to attract investment from companies which could consider locating in other jurisdictions which did not have a carbon tax.

Mr Barney said the bigger problem for data centres or cloud computing vendors setting up shop in Australia was instead the high cost of international networking. He said that the cost of international communications using the Endeavour or Southern Cross submarine cables was 20 times as expensive as using cables across the Atlantic.

That translated into higher prices for end users according to Mr Barney. He said there was a 30-40 per cent premium paid by Australian users compared to the prices paid by Pacnet customers in other parts of the world.


Pacnet had even considered building its own submarine cable to overcome the problem he said, but the numbers had not stacked up. He said that it might have been better for Australian competitiveness had the National Broadband Network focussed less on last mile connections and more on international connections linking Australia with other nations.

Unless the issue was addressed he said Australia would be limited in the businesses it could attract, and the applications that would be available to citizens. He said financial services and inherently global businesses were most at risk of becoming internationally uncompetitive because of the higher cost of bandwidth.

To explain its decision to quadruple its local data centre Pacnet cited research from Frost & Sullivan suggesting that the Australia data centre services market will grow from $US447 million in 2010 to $US1.2 billion in 2017 .

Internationally the company has four CloudSpace data centres – one in Sydney, two in Hong Kong and one in Singapore. In addition the company leases space in four other data centres around Australia.

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