Inside Icolo’s plan to operate affordable & carrier neutral data centres in Kenya

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Carrier neutral data centres are a relatively new concept in Kenya. Most data centres here are owned and operated by Internet providers. Carrier neutral data centres offer advantages such as the ability to separate Internet provider and data centre provider and they are also more affordable. Icolo is a company that builds and operates carrier neutral data centres.

I had a sit down with CEO Ranjith Cherickel to get a better picture of what Icolo is about their plans for the future.

How did you come about the name?

The name is actually quite simple. What we’re doing is that we’re building data centres which is not new to Kenya or Africa. What has been happening is that data centres have always been built by carriers; Safaricom or Access Kenya and the likes. What that does to consumers is that it ties you down to one network which is a terrible idea because you have to use their network.

Carrier neutral data centres have become very popular in Europe for about 10-15 years. Customers have moved from carrier data centres to carrier neutral data centres. Kenya doesn’t have carrier neutral data centres.

So when we were thinking about the name, we wanted something that would convey that. What we provide as a service is co-location, which is space and power so colo. So you pick your internet provider which is i and we provide co-location.

What inspired the idea?

There were just no co-location data services in Africa. I worked in telecoms for Nokia and I found it pretty amazing that there was no data centres in Africa except those provided by the carriers and they were expensive. For example, one of the large carrier data centres here has a service level guarantee of 92%. Ours is 99.982%. So for the customer, that is a humongous difference and we don’t negotiate that because that is our guarantee.

Why Kenya?

I’ll tell you why Mombasa first since it was our first site. If you look at Africa and you are a big internet provider, you’d look at it from the map and pick out the entry points. Those are Lagos, Durban, Capetown and Mombasa and that kind of covers the map. All these places have data centres except Mombasa. So what does that do for us as a country? They don’t go for us, they first go to South Africa or Lagos. We saw a big hole because East Africa is a market of 182 million people so it would make sense for them to come here first over any of the other markets but because there is no infrastructure, they don’t come. So that is why Kenya made sense.

The team is all Kenyan, expect me. So it made sense for us to start in Kenya than in Uganda or Mozambique plus the markets in Kenya are open. We don’t have much interference from the government which is a positive.

Did that fact that you had a team that was already from Kenya draw you to this country?

No. I was already living here and I had lived here for about 2 ½ years before I started this.

How would you explain the difference between a carrier data centre and a carrier neutral data centre?

I think for one, if you’re using a carrier data centre, you are forced to use their network so you are limited by the size of their network. As a business, you are always changing so today, your focus could shift from say rural to urban. If the data centre you are using does not have good network coverage in a particular area, you’d have to shift to another one and that comes with a switching cost. It also takes very long because you have to move and set up your equipment. A carrier neutral data centre allows you to switch easily from Safaricom to Access Kenya for example depending on which network is strongest and you can do that in a matter of hours and it costs nothing to switch.

What are the features of the Mombasa and Nairobi data centres?

Mombasa is the largest carrier neutral data centre outside of Sub Saharan Africa. Mombasa is targeting the large international internet giants. Nairobi on the other hand, is more Kenyan based in that it targets the financial institutions, the universities, hospitals etc. Mombasa has 226 racks. For Nairobi, phase one is about 50 racks and phase two is another 226 racks. We’re doing it in two phases.

What contingencies do you have in place in case something happens in terms of coverage?

So for us, we provide the infrastructure and we have two sets of everything. We built the contingency into the infrastructure. Of course as a customer, you have to also plan for disaster, but our services offers a reliability of 99.982%. You would still have to plan for disaster recovery.

Is there a plan in the future to bring in cloud service providers into the fold?

They are​ all our customers. So we are building data centres for the cloud service providers as well. We don’t compete with them. They provide the severs and the software and we provide the infrastructure.

What’s the plan for Kenya?

We would like to become the largest data centre operator in Kenya by the end of this year. We would like to be in Kampala, Dar-es-Salaam in the course of the next 18 months or so.

What’s the business environment like in Kenya in your opinion?

Not bad. But I think some of the tax issues are unnecessarily complicated. The rest is not bad, getting a licence is not hard. Talent is also not hard to find.

If you ask me what’s wrong, it’s that there’s no money. There is no capital for building companies. There is no risk capital, which is the biggest issue. But generally, all the other elements are there in a positive way.

What’s your background as a professional?

I have spent most of my life in tech. I worked in Silicon Valley and I was in New York for a while. Originally, I was in start ups then I worked for a big telecom provider called Verizon and then I moved to Europe and worked for Skype. Then I moved to Siemens which became Nokia-Siemens and eventually Nokia.

I came to Kenya in 2011 as head is sales for Africa for Nokia. So that gave a good business background and allowed me understand the underlying drivers for customers and it gave me a lot of systems software background for sales.

Having worked in various countries and seen the tech gaps that existed there, what particular tech gap did you see in Kenya?

Over-estimating the size of the market. It’s actually​ quite small and if it’s small in Kenya, then it’s small in Kampala and much smaller in Tanzania. I think people seem to forget that we are still missing big pieces of the infrastructure puzzle. I don’t think there is enough being done by the government to support that. They are trying, no doubt, but it’s not enough.

Without a sizeable market there is no scale, without scaling, there is no push down in costs.

What happens in Kenya quite often and this is why our project is very ambitious is building scale. We are starting with 226 racks. It is very difficult to provide a good cost effective service if you don’t have scale and that’s where I think we are really struggling in the country.

What kind of infrastructure do you think Kenya needs to move towards a middle income country?

I think more money needs to be put into infrastructure​. There needs to be more connectivity on the roads and networks. The county government should be building pipes that people can lay then coming to collect the money. I think some of the initiatives around to get more and more multinationals to come and be based here should be tax incentives and make it easier for the individuals to get visas. You can’t run tech companies without international talent because even large companies like Google in London have tonnes and tonnes of expatriates and that’s just the way it works.

More needs to be done to make places like Konza city attractive. Build the roads, provide housing. There should be shuttle buses that can allow people to access it to and from Nairobi. I don’t think a lot of planning has gone into that.

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