Finland aspires to host a growing number of cloud services. What makes Finland a good location for their data centres? And are there benefits for local users?

IF YOU wanted to find a symbol for some of the most significant changes that the Finnish economy has seen in the recent times, you could do worse than settling on Google’s data centre that is located in Hamina. As paper manufacturing has progressively left Finland, the old paper mill that the Internet giant bought from Stora Enso now hosts one of its data centres.

Google’s 200 million-euro investment is not just a one-off, as more and more cloud service providers are looking at Finland as a place where to set up their data centres. Moreover, Finland is actively marketing itself as a suitable location to such companies.

This work is already bearing fruit: the Russian Yandex, the fourth biggest search engine in the world, is building its new data centre in Mäntsälä. Also Google will continue to invest in its Hamina site with 150 million euros more, which will double the centre in size and make it the biggest data centre in the Nordic countries. And when Microsoft announced its purchase of Nokia’s mobile phone operations, it also said it would build a 190 million-euro data centre in Finland.

“Whether the data
centre industry will
reach similar importance
as that of the forest
industry’s in its heyday
remains to be seen.”

At home in the cold

Having such big players in the cloud computing space as Google and Microsoft choose Finland is significant also from the point of view that often smaller companies follow the example of major ones, explains Timo Antikainen, Vice President of Invest in Finland, a government agency that promotes foreign investments into Finland. The choice also reflects the fact that in addition to political and seismological stability, which are crucial, Finland as a location offers certain benefits to companies running data centres.

First, there is the weather. Data centres typically are electricity intensive facilities already for the reason that the rows and rows of servers require extensive cooling – in an old data centre, cooling alone amounted up to more than a half of total electricity costs (today’s centres have somewhat more effective cooling systems). But with a free cooling system, which uses cool outside air and can be used almost throughout the year in Finland, these costs can be driven down. Also cold water can sometimes be put to use: when Google chose Hamina as the site of its data centre, it said that one attraction was the access to sea water, which the centre uses as part of its cooling system that already existed at the paper mill.

Then, there is the reliable electrical grid and relatively low price of electricity. Antikainen says that Finland is one of the cheapest countries for energy, which accounts for a major part of the overall costs of running a data centre. And largely to meet the demands of the wood and paper industry, the Finnish power grid is very robust – Antikainen estimates that it is one of the most reliable ones in the world.

“For example, the industrial area of Kajaani, where two data centres are located, hasn’t experienced a power cut for dozens of years. In fact, my understanding is that there is no backup power generator on Kajaani, that’s how reliable the grid is.”

Paper production is also an energy intensive industry, and as a lot of production has been transferred outside the country in the recent past, this has freed some of the power grid’s capacity, says Antikainen. Existing power connections are another reason why deserted paper mills make for good data centres. “The power consumption of a paper mill is about 100 megawatts, which happens to correspond with the consumption of a major data centre.” He also points out that thanks to the substantial use of free cooling systems, data centres in Finland use less electricity than those in Central Europe, meaning that the average carbon footprint of a data centre is also smaller here.

Finally, Finland has the best telecommunications link from Europe to Russia, which makes Finland appealing to those cloud service provides that operate in the country. And if the government’s plans to build a new submarine cable that would connect Finland to Germany and improve data transfer rates to continental Europe proceed as scheduled, this will make Finland’s position between Europe and Russia even more favourable.

Pros and cons of cloud computing

The geographical location of a data centre does not only define the surrounding weather conditions and infrastructure. What is perhaps less known is that where data is physically stored also determines the legislation applied to the data. For example, data saved in Finland is subject to Finnish legislation. Yet figuring out where your data is stored may require some extra efforts from the user, or at least some careful reading of the service provider’s terms and conditions.

How seriously one should look into this depends on what the service is used for, says Harri Ruusinen, Information Security Expert at F-Secure. “If my Facebook account disappeared, for example, personally it wouldn’t that tragic even if I wouldn’t be able to get it back. But if I stored all my photos on a cloud service, and they would disappear, that would be a huge thing as it would like wiping many years away from my life.”

On the other hand, if the data is well protected and backed up by the cloud service provider, storing it in their servers might be more secure than having it only on a computer’s hard drive, which is prone to breaking. And if the service provider decentralises the data it host into several geographical locations, it guarantees an even bigger protection from an accident at one of its sites. “All in all, you should look at the positive and negative sides of using a cloud service, and take into consideration what data you want to save and for what purpose,” says Ruusinen.

Moreover, although cloud services are often cheaper than traditional computing solutions, or entirely free, there may be a flip side. “For instance Facebook makes money out of their users’ information by using it to target ads better. So in that sense there is always a price,” says Ruusinen. He notes, however, that this doesn’t necessarily mean that such services should be avoided, as long as you are aware of their conditions and take them into account when using them. “You should consider what you write on Facebook, or what you save in the cloud.”

If your sensitive to the idea of unwanted eyes looking at your data, one particular angle to consider is the fact that due to the Patriot Act legislation, which the United States passed in October 2001, US officials have the right to investigate foreigners’ data that is stored in a server in the US, or if the service provider’s ownership is in the US. “If you think of the big players – Apple’s iCloud, Amazon’s Cloud Drive, Microsoft’s SkyDrive – they all tend to be US companies,” Ruusinen says.

“For a consumer this might not be that significant. If I save food recipes on Google’s servers, it doesn’t really make a difference to me if they are accessible to others. But for firms it is a completely different matter. Few companies want to give access to and right to copy information and designs of upcoming products, for example.”

If you are seriously concerned about the security of your data, one option is to look into encrypting it, he says. Sometimes the service provider can do this at their end, or you can look into encrypting the data yourself, which at least in theory would prevent anyone else from being able to access your files.

From pulp and paper to bits and bytes

Finland is not alone in trying to entice large online players – in fact, all Nordic countries are marketing themselves to potential data centre investors. Although the countries are competing against each other, they all also benefit from the overall interest in the region. For example, when potential constructors visit sites in one of the countries, they often visit also others during the same trip, according to Antikainen.

He says that Invest in Finland’s message of Finland as a good location for data centres has been well received. What helps is the Finnish government’s commitment to the same goal, as evidenced by the fact that the government wants to lower the energy tax rate for data centres.

Moreover, the government’s decision to drop the corporate tax by 4.5 per cent to 20 per cent has also been noticed. “These measures ensure that Finland is on the radar screen of potential companies.”

Whether the data centre industry will reach similar importance as that of the forest industry’s in its heyday remains to be seen. Nevertheless, Antikainen says that the goal is to create a significant concentration of data centres in Finland, which has notable consequences also for the surrounding economy.

“When you consider the building of these centres, and the logistics and maintenance of running them, the total employment that they bring could be in the thousands,” Antikainen says.

Also Ruusinen sees the development in a positive light, and not only in terms of economy. “It could also result in more powerful internet connections from Finland to abroad, and for a Finnish user, it would ensure that genuinely Finnish cloud services could be produced, and Finnish legislation applied to the services.”

Although data centres may not solve all of the issues of Finland’s economy, they could prove to be an important piece of the puzzle. At the very least, they would offer a meaningful second life to some of those derelict paper mills.

Teemu Henriksson