Cloud // Infrastructure as a Service
08:42 PM
Charles Babcock
Charles Babcock
Connect Directly

Data Centers Don't Need To Be Regulated Utilities

The New York Times misses the big picture with its take on data centers as "wildcat" utilities that need government oversight. There is no data center monopoly in northern N.J.

A "wildcat power broker" in this position, if I understand what Glanz means, might use the scarcity of power as a means to increase prices at will, or worse, help generate the shortage in the first place. The northern N.J. data centers are not power brokers, in that sense. They are subject to the limits of what their supplier and the grid can deliver to them. Their control is over a set of resources that defines a data center -- the network connections, the secure space, the cooling system -- with electricity as one element of that offering.

If they charge double for power, it's possible that's because they have signed contracts to deliver twice the amount the customer typically uses and must bear the expense of keeping that supply available, even if the customer isn't using it 85% of the time. Failing to do so could lead to financial penalties written into a customer's service level agreement. While there may be some calculated risks undertaken by the data center owner in allocating power, the reckless reselling of power would surely lead to a day of reckoning.

In addition to having to supply direct power, the data center operator must also have an uninterruptible power supply installed, in case of grid delivery failure. The backup must kick in the instant the grid fails. Otherwise data will be lost in running applications and data integrity will be compromised as systems try to come back online. In some cases, that's a bank of 12-volt batteries siphoning off a trickle charge from the incoming power supply. Today it's usually a more sophisticated mechanism that attempts to minimize the power lost, such as Vantage's insulated gate bipolar transistor unit. In this case, it's good to be bipolar; it cuts resistance to the electricity supply's flow and reduces power loss.

In addition, for space to be suitable as a data center, it must have emergency backup generators capable of replacing all the power that's normally imported. Perhaps Glanz knows how to amortize the expense of insulated gate uninterruptible power supplies and backup systems, but I suspect most public utility commissions do not. (But the N.J. utility commissioners know quite well the value of backup systems in the wake of a storm, such as Hurricane Sandy.)

A wholesale data center is not a wildcat power broker with the goal of profiteering from a stranglehold on the power supply. It's a combination of services in a location where such a set is in high demand, such as outside New York in close proximity to the trading exchanges. A public utility, seeing potential business at risk, can contract for more power, add substations, upgrade its grid. The wholesale data center cannot. Power is brokered to it, but it cannot become a power broker with the ability to, at will, expand or contract the supply.

"The sale and resale of power is subject to a welter of regulations and price controls ... But the capacity pricing by data centers ... appears not to have registered with utility regulators," Glanz concludes. In this case, the absence of regulation is a good thing.

There is no data center monopoly in northern N.J. On the contrary, it is one of the most competitive regions for building data center space in the world. Let the data center operators run their business as they see fit. They're the ones who know it best. And let's hope the regulators who read The New York Times keep their common sense and don't take Glanz's recommendations too much to heart.

2 of 2
Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
User Rank: Strategist
6/12/2013 | 7:39:12 PM
re: Data Centers Don't Need To Be Regulated Utilities
dcguy is a data center professional who was interviewed by James Glanz at the New York Times but not quoted in his May 13 story. He says he disagreed with the drift of Glanz' questions. I've had my own discussion with dcguy and he strikes me as a knowledgeable figure after 18 years in the industry. Readers may draw their own conclusions but I for one don't get the one-sidedness of Glanz approach. Charlie Babcock, senior writer, InformationWeek
User Rank: Apprentice
6/12/2013 | 12:56:28 PM
re: Data Centers Don't Need To Be Regulated Utilities
I finally made some time to read your article and I thought it was a fine rebuttal to what Mr. Glanz had presented. I was contacted for the article however my opinions based on being in the industry were not cited.

I found it interesting that while he contacted what I suspect were dozens of insiders/potential sources (at least two other peers I know of), not one of the sound bytes were used, only the ones that supported his position of data centers as filthy uncontrolled buildings where an industry conspires against the axe grinding realists like himself to do evil in the world and wield filthy electricity as its weapon of choice. And occasionally give said realists something trendy and sexy to write about to stir the pot. You quoting only him was the icing on the proverbial cake. Well played sir.

The fact is that data centers have demonstrated more efficiency gains per megawatt than the comparative number of homes (1 MW=1,000 Homes) in the last 30 years. The carbon footprint of 1,000 homes is far greater than a data center and 1,000 homes operation FAR less efficient than a data center. A cruise ship runs its diesel engines and generators more in one cruise than a data center will in its 20 year useful life. The emissions from power generated from a coal plant to feed a city are higher than that of a data center. That's where the real story is - comparing everyday uses of power, at scale, against the data center scale and see who is greener. My money is on the data center.
User Rank: Author
6/11/2013 | 3:11:43 PM
re: Data Centers Don't Need To Be Regulated Utilities
"Interviews with regulators in several states
revealed widespread lack of understanding about the amount of
electricity used by data centers or how they profit by selling access to
power," Glanz wrote.

I agree with Charlie that the industry experts are on the cutting edge here. Think of the knowledge inside Facebook or Amazon on this topic, compared to government regulators. Does this remind anyone else of the early days of virtualization and cloud security, when IT pros were way ahead of PCI auditors in terms of knowledge?

Laurianne McLaughlin
User Rank: Strategist
6/10/2013 | 9:25:53 PM
re: Data Centers Don't Need To Be Regulated Utilities
When I reread what's written here, I want to add an addendum: major data centers must use power efficiently or the government may one day be justified in stepping in and regulating then. Efficient use of power in modern life will be required, not optional, as the cost of global warming starts to be felt. The data centers described by the N.Y. Times in Northern N.J. are in many cases modern ones that deliver 480 volt power off transmission lines to a power panel in the vicinity of the server racks. The higher voltage reduces power lost in transmission. Most enterprise data centers, however, use standard 120 and 220 volt power, because they don't wish to deal with the hazards and infrastructure requirements of 480 volt power. The difference is akin to the difference between the water in a high pressure fire hose versus the water coming out of the kitchen faucet. Completely understandable that enterprise IT prefers the latter, but wholesale data centers should be respected for what they've accomplished - as well as targets of criticism. Charlie Babcock, senior writer, InformationWeek
Multicloud Infrastructure & Application Management
Multicloud Infrastructure & Application Management
Enterprise cloud adoption has evolved to the point where hybrid public/private cloud designs and use of multiple providers is common. Who among us has mastered provisioning resources in different clouds; allocating the right resources to each application; assigning applications to the "best" cloud provider based on performance or reliability requirements.
Register for InformationWeek Newsletters
White Papers
Current Issue
Top IT Trends to Watch in Financial Services
IT pros at banks, investment houses, insurance companies, and other financial services organizations are focused on a range of issues, from peer-to-peer lending to cybersecurity to performance, agility, and compliance. It all matters.
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
Join us for a roundup of the top stories on for the week of July 17, 2016. We'll be talking with the editors and correspondents who brought you the top stories of the week to get the "story behind the story."
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.