Friday, October 22, 2010

The Tennessee Valley - The Next Hub for Private Data Centers?

By David Gross

With North Carolina quickly establishing itself as the Southeast's hub for private data centers, and neighboring Virginia offering generous tax incentives for new data centers, the Tennessee Valley Authority is trying to spread the wealth across the rest of the South, promoting 12 sites in its service territory as "prime locations".

The sites are located across the authority's region, and are mostly near Interstates.   A few are in noteworthy locations.   Maryville and Lenoir City, Tennessee are near the major supercomputing lab at Oak Ridge, and Olive Branch, Mississippi is just over the Tennessee border, about 15 minutes from Memphis airport, and data centers have a habit of going up near airports.

The TVA does over $11 billion in revenue a year, more than the entire public co-location industry.   In their analysis of prospective locations, they looked at the typical items, like access to power, transport, and bandwidth.   However, private data center construction is often the result of neighboring counties competing with each other, neighboring states one-upping each other on tax incentives, and executives getting to know the local elected officials.  Additionally, for 100,000+ square foot facilities, it's a limited pool of buyers, mostly major financial firms, large technology companies, and well-known websites.  It's not a large market from which to draw.

As this industry grows, I think we are likely to see more of this, and it's somewhat reminiscent of the fad in the mid-to-late 1990s of appending a "Silicon" prefix to some geographical feature of a state or region, and using that as the centerpiece of an economic development campaign.  But the Silicon Forests and Prairies and Dominions all still fought a zero-sum game that most states would rather forget.   While there is no reason large private data centers all have to go up in Upstate New York, Oregon, or North Carolina, and the TVA is in a unique position as a power provider, it will nonetheless have to sharpen its marketing message in order to stand out among the growing number of places trying to recruit data centers.

View TVA "Prime" Data Center Locations in a larger map

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