ROOT Shaking Up Montreal Colocation Prices update from May 2014

Montreal has all prerequisites of a strong colocation market: cheap hydro power, cool climate and great connectivity to New York, Toronto and Europe. Jason van Gaal, CEO and founder of colocation startup ROOT Data Center saw opportunity in Montreal and decided this was the time to strike.

The company is investing $20 million to retrofit a building in the city into a colocation facility. Construction is on track to complete in August, and open in September. The twist: ROOT is offering retail colocation at wholesale prices.

"By using a next-generation green cooling technology, the first of its kind in Montreal, we are able to consume 50 percent less power than our nearest local competitor,” van Gall said . “This unique competitive advantage, combined with rates negotiated with Quebec Hydro, will enable us to provide colocation services at a price point 30 percent less than our nearest local competitor and 70 percent less than competitors in Ontario and other states and provinces."

The company is using a cooling system by KyotoCooling (now owned by Cloudsite) for this build, which together with cold weather will drive free-cooling efficiencies. The system uses a "heat wheel," also known as "rotary heat exchanger," for airside economization.

Real estate and power in Montreal are also cheaper than in other cities, and this combination is what van Gaal says will enable the company to provide services at much lower rates than competitors do. “We’re saving on the operations side and passing to the customer,” van Gaal said. “We’re using green technology, and new technology that wasn’t available five years ago to drive efficiency.”

Other providers in the market include iWeb (now a part of Internap), Peer 1, CenturyLink and Sungard.

High power density, no raised floor

ROOT's facility will provide 5 megawatts at full build-out. The first phase will launch with 2.5 MW. It will be able to handle 3 MW to 3.5 MW of critical IT load, according to van Gaal.

It is designed to support 30 kilowatts per rack across the entire data center floor. The design achieves high densities by using slab floor (instead of the traditional raised floor), ducted hot-air return and cooling-infrastructure efficiency.

TekSavvy on board as investor and tenant

With an anchor tenant on board, the startup is well capitalized. TekSavvy, a Canadian Internet service provider, has signed on as both a tenant and a strategic investor in the Montreal data center.

“We’re pleased to partner with ROOT," Marc Gaudrault, CEO of TekSavvy, said. "ROOT is a company that focuses on offering high-value, reasonably-priced products that bring real competition to the marketplace."

Demand for colocation kicking in

The colocation business is not new to van Gaal, who founded ROOT after selling another colocation company he started to the Canadian telco and media giant Rogers Communications. After selling the firm in September 2013, he studied the market and saw that demand for data center space in Montreal was outpacing supply.

"In terms of technology adoption, U.S. seems to lead," he said. "We’re laggards, and Quebec lags the rest of Canada. I see guys who built data centers in house in the past. Colocation adoption is just occurring. Demand is going to kick in.”