State backs Norway’s fibre cable capacity building

Norway is accelerating its ambitious National Digital Strategy (NDS), with the government planning to prioritise funding to reduce its reliance on Danish and Swedish networks.

The Department of Digitalisation (DoD), which is tasked with leading the NDS, said the government’s capital investment commitment is vital to enable Norway achieve its set targets of becoming a Nordic leader in digital innovation and an important European hub for datacentres and cloud computing activities.

The DoD, which operates as part of the Ministry of Local Government and Modernisation, obtained clearance from the European Free Trade Association (EFTA) Surveillance Authority (ESA) in September to allocate NOK 100m (€10m) in state support payments to new international fibre optic cable construction projects.

As part of its role, the ESA monitors compliance with the Agreement on the European Economic Area, allowing EFTA-member states such as Norway to participate in the Internal Market of the European Union. As a member, Norway was required to agree a legal framework with the ESA before establishing the grant-based project support scheme.

“Norway needs to build alternative capacity abroad that delivers secure and reliable internet traffic for business and society in Norway. At a fundamental level, we must make data traffic and internet access to and from Norway more robust,” said Nikolai Astrup, Norway’s digitalisation minister.

The framework for the DoD’s fibre cable project grants scheme was influenced by a series of technical reports from Nkom, Norway’s national communications authority.

Nkom underlined the need to build alternative international data traffic routes because much of Norway’s international transmitted data traffic is currently routed through Denmark and Sweden. 

Nkom launched a tender competition process on November 11 that fully aligns with the DoD’s initiative. The process will help shape how the DoD allocates state funding to qualifying subsea fibre cable projects.

“Norway is transitioning to become one of the most digitised countries in Europe. Our dependency on transmitted data traffic from Sweden and the Copenhagen area represents a vulnerability we need to address. Investing in new fibre cable capacity and projects gives us important diversity and enhances our security,” Astrup said.

The DoD’s NOK 100m allocation has been written into the Norwegian government’s state budget for 2020. Funding is set to be awarded to fibre cable project operators once the Nkom-run tender process is completed during the first half of 2020.

The DoD’s initiative will also deliver open and non-discriminatory wholesale access for internet service providers (ISPs) in Norway for a period of up to seven years.

Obtaining state support from the DoD-run scheme is open to submarine fibre optic cable projects such as Celtic Norse, the 2,000km (1,250 miles) subsea fibre cable that aims to connect central Norway to Ireland, with further connectivity to the US east coast.

Managed by Nordavind DC Sites, Celtic Norse’s shareholders include the municipally owned power and broadband supply companies Nord Trøndelag Elektrisitetsverk (NTE) and TrønderEnergi.

The Nordavind consortium is hoping Celtic Norse will help open up major datacentre investment hubs across Norway, while providing additional connectivity to major power grid points, a growing enterprise datacentre market and hyper-scale datacentre projects and operations across the country.

Celtic Norse entered the Request for Proposal (RFP) phase on 30 September, said Erling Aronsveen, the company’s CEO. The company plans to complete the final stages of project financing in the first quarter of 2020.

“We hope to select a vendor to build the system by the end of 2019. We will then complete the final stages of financing, with the significant advantage of having a contract signed for a turn-key build,” said Aronsveen.

The Norway-Ireland cable, which will enable direct connection to the trans-Atlantic AEC-1 cable between Killala Bay in County Mayo and Shirley in New York State, is planned to be ready-for-service in 2021.

The New York branch will drastically shorten the response times for data communications between Norway and the US. The Norway landing station will be at Oysanden located in the municipality of Melhus.

Celtic Norse is also partnering with Vodafone Iceland to develop a branch into Iceland. In addition, the company will explore commercial opportunities to develop a branch into Scotland as part of a co-venture with local government investment agencies and utilities.

The emergence of large-scale fibre optic cable projects reflects growing confidence among Norwegian and international investors in Norway’s ability to become a major international digital player and leading European hub for small and large datacentre operations.

Norway’s cold climate offering, access to renewable energy and the Norwegian government’s commitment to provide electricity at preferential rates to data centre operators, combines to make Norway an attractive proposition for international datacentre operators.  

International interest in Norway’s data hub potential has already attracted the attentions of Google and Microsoft, with both global giants planning to grow investments and their presence in Norway. 

Microsoft and local partner Equinor (formerly Statoil) are on course to open hyper-scale datacentres at two locations in Norway in the first quarter of 2020. The Microsoft Cloud investment will include Azure, Office 365 and Dynamics 365.

The new facilities form part of a broader deal with energy group Equinor which is collaborating with Microsoft Cloud to drive its digital transformation and cloud-enabled innovation in Norway.

DigiPlex, one of Norway’s leading datacentre providers, is investing €60m to build facilities in the greater Oslo-region. The two planned datacentres will have a combined facility size of 8,500m². They are scheduled to become operational by year-end 2020.

In a third high-profile investment, Statkraft has partnered with Google to build one or more datacentres in Norway. The collaboration took shape in August when Google purchased a large 482-acre landbank in the municipality of Skien, located in southern Norway.

As part of its role, Statkraft is tasked with identifying potential datacentre sites in Norway, and building the power infrastructure and managing on-site facilities.  

“Statkraft is working hard to attract large datacentres to Norway through our Data Center Project. Partnering with Google is a huge positive for us. We are a major Nordic producer of renewable power, and a good fit for the highly energy-intensive datacentre industry,” said Christian Rynning-Tønnesen, Statkraft’s CEO.

Norway’s capacity-building on the digital, datacentre and cloud fronts will also benefit from the trans-Arctic Northeast Passage Cable project backed by a Nordic-Japanese investment consortium led by the Helsinki-based Cina.

The 10,000km fibre optic cable will run from northern Finland through Kirkenes in Norway and via the Kola Peninsula corridor to Asia. Strategic partners include the Russian telecom company MegaFon.