All hail Montreal, the colocation King in the North

Montreal’s rapidly growing reputation as a hub for new data center investment is gaining attention both at home and abroad. Montreal is Canada’s de facto data center capital, and where ROOT proudly calls home.

Half of new colocation business in Canada now originating south of the border. IT World has called this movement of data into Canada a data center gold rush, with Montreal as its Klondike. Here are four reasons why Montreal is the colocation king in the north:

Reason 1: Quebec’s affordable hydro-electricity and low cost to cool

When Amazon Web Services, the largest public cloud provider, announced with much fanfare that they would launch their AWS Canadian cloud region in Montreal, it turned the heads of industry-watchers across North America. Teresa Carlson, VP of public sector at Amazon Web Services said that after a thorough study of several Canadian sites, it was energy rates, the lowest in eastern North America, that won over AWS. “We picked the area that we did because of the hydro power,” said Carlson. “We did find them (Quebec) to be very business friendly.”

“After a thorough study of several Canadian sites, it was Quebec’s energy rates, the lowest in eastern North America, that won over AWS.”

In a major study of North America’s 17 biggest data center markets, Montreal had the second lowest power rates, behind Atlanta, but in Canadian Dollars, so is less expensive than the comparative US locations.  Coupled with Montreal’s naturally cool climate, overall power usage is lower.  ROOT Data Center leverages free climate-based cooling 90% of the year, significantly lowering power usage and total cost for customers.

Average Power Cost in North America

Reason 2: Proximity to East Coast Markets

When OVH opened their data center in Montreal, CTO Octave Klaba said OVH’s decision to place its largest data centre in the Montreal Area was an easy choice for reasons both functional – its lack of language barriers and proximity to Toronto and New York City.

Proximity to major urban areas allows strong network connectivity as well, with latency as low as 7.5ms to either 60 Hudson in New York or 151 Front Street in Toronto.2

Reason 3: Generous incentives

Once resistant to providing tax incentives for new data centers, the Quebec government changed tune at just the right time. The province now has an impressive tax regime for tech businesses that even make politicians in neighbouring Ontario jealous. Among the highlights:

  • Generous capital cost allowance rates for purchasing clean energy equipment
  • Up to $25,000 tax credit per employee for hiring a new IT employee
  • 30% tax credit on eligible R&D expenditures (Ontario’s rate is 10%)
  • 5% tax credit for labour costs in multimedia titles 

Reason 4: Strong privacy laws

Microsoft, Salesforce and Amazon have all cited avoiding US surveillance laws as reasons for investing in Canada. If customers head north for stronger privacy laws, than they head to Montreal for the affordable, clean energy and cool climate. And the EU’s top court striking down laws that governed data transfers between US and EU companies has made Canada a top choice for European organizations needing a North American footprint.

“If customers head north for stronger privacy laws, than they head to Montreal for the affordable, clean energy and cool climate.”

Montreal’s reigning status as the north’s colocation king is no longer a well-kept secret, and for good reason.

 


 

1. Georgules, Julia. 2016. “Data Center Outlook, North America”. JLL, San Francisco.
2. Based on carrier engineering measurements and tests