Strawman: How to save the New Zealand economy

Put aside the idea that it’s Kim Dotcom who wants to build a new cable connecting New Zealand with the outside world for a moment and think about what we’re really talking about here.

Firstly, we’re talking about building a data centre. Nothing unusual in that – we have many dotted around New Zealand, some large enough to register on the international scale of such things. Between Orcon, Vocus Communications and Weta FX’s donation of the New Zealand Supercomputer Centre, we have several.

But this would be orders of magnitude larger – something that would either power Dotcom’s new Me.ga service or cope with the demands placed on Google, for example. It needs to be robust, it needs to be multiply redundant and it needs power. Lots of power. Green power. Fortunately we have that and even better, the Tiwai aluminium smelter is apparently going to be coming available soon and it requires 610MW to function. That’s 14% of the national output, which makes for a scary conversation with government whenever the smelter’s owners talk about packing up and leaving.

Google’s combined data centres use 260MW as best I can fathom which leaves us in a very good position to take over production of the whole lot and do it entirely by green means. That’s quite important to a company like Google, but don’t forget Facebook, Apple, Twitter (those tweets don’t weigh much but by golly there are a lot of them) and all the rest. In fact this piece in GigaOM nails it quite nicely  so have a look at why North Carolina is the place these guys base their mega centres. Hint: power’s cheap there – cheap but dirty (61% of their electricity is from coal, 31% from nuclear).

How cheap? They pay between 5c and 6c per kilowatt hour, which is a really good price.

According to Brian Fallow in the Herald  Tiwai smelter pays 5c per kilowatt hour also, but don’t forget that’s New Zealand money, not US money, so let’s call it 4c per kilowatt hour in American.

Clearly that’s a good price, plus it’s almost all green which means a big gold sticker for any data centre using New Zealand.

So we’ve got electricity covered, if Kim gets his submarine fibre built we tick off another huge problem. There’s not much we can do about the latency between here and the US, so let’s ignore that thorny issue for now. We’re conveniently located a long way from everyone so let’s move along.

There’s the issue of land which as we know is hideously expensive in New Zealand. Unless it’s somewhere like Tiwai Point in which case it’s not. I think we can tick that box off, particularly if you consider the US pricing as your benchmark.

That leaves us with two major stumbling blocks. Firstly, the staffing situation.

We need to produce enough graduates (or import enough graduates) to staff this kind of monstrous facility and at the moment we’re not doing that. We don’t have any push to get secondary school students into the industry and we don’t have any long term plan to stop this incessant churning out of management students and encourage kids into the world of ICT.

Without these kids coming through at all levels, we’re just not going to get a data haven off the ground.

Because that’s what we’re talking about here – turning New Zealand into a data haven where anyone can store data safe in the knowledge that we treat bits as bits and that’s that. Nobody is going to trust us to look after their data if we’re willing to send in the Armed Offenders Squad in a chopper-fuelled moment of madness on the say so of some foreign national. It’s just not viable.

The final problem then, is the legal situation.

We would need to become the neutral ground, the data Switzerland if we’re to gain their trust. Publicly adhered to rules regarding data collection and retention. Privacy built in, access only under the strictest conditions.

But think of the upside – the PM talked about New Zealand becoming a financial hub and while I get where he was coming from, that’s old school stuff. Let’s become the home to all things data related instead. It turns our long-time weaknesses (distance to market, isolation, relatively small size) into strengths. Plus we’re New Zealand! Nobody’s going to invade us, we’re too far away and too friendly.

Latency aside, what’s the downside of getting this done? If we build the capacity we can attract a first mover in and if we have one, we can attract more.

Customers from banks to insurance companies to individuals to governments to movie studios (yes, you luddites, you) could make use of our clean power, our isolation, our cheap land and our fantastic environment to secure their precious bits and we would get a steady, reliable source of revenue for the country that’s sustainable in all meanings of the word.

Have I missed anything? Why won’t this work? Is anyone thinking about this?