What we learned at Capacity Latam 2024

WUE matters as well as PUE

The sustainability calculation in many data centre markets focuses on green power. But in many Latin American regions this can be less of an issue, for example, 80% of Brazil’s electricity is generated from renewable sources. Instead, focus is often on water use, which can be a scarce resource in many areas. In Chile, for example, data centre operators have run into problems with water consumption, with pushback against one site that was due to use as much water as 2,000 households.

This is not going to work from a PR or a sustainability point of view. Recycling water can help. Elea revealed they are using recycled rainwater at a facility on the continent – but the main challenge is getting data centre water usage effectiveness (WUE) quotient down and developing more sustainable operations in every aspect, not just where the energy comes from.

 

Fortaleza is growing as a hub

Distance matters in connectivity – for latency, for efficient construction, and for manageable, serviceable networks. This explains the rise of the Brazilian city of Fortaleza. Located in the northeastern Ceará region, it is one of the closest parts of Brazil to Africa and Europe geographically. As a result, ten submarine cable systems run directly to the city, including South America’s only direct connections to Africa and Europe.

Capacity Latam delegates heard of the growing importance of Fortaleza to the continent – and not just because of these cables. The city’s connectivity market is growing unexpectedly fast, with data centres filling up and new ones being built, as well as new presence either planned or existing for Angola Cables, China Telecom, and more.

 

You can’t avoid AI

AI saw a lot of stage time at Capacity Latam this year, as it has at every other event. And of the two areas connectivity providers need to address with AI – how to build for the demand, and how to use it in their own operations – it was the second one that produced the most interesting discussions. Several speakers shared stories of already using AI to automate operations, including predicting customer churn, supporting sales teams with automating admin, and improving service in submarine cable operations.

 

Rural connectivity in Latin America is vital

Latin America is a highly urbanised society. 80% of the region’s population live in towns and cities, a higher share than elsewhere in the world (for comparison, the EU’s rate is 72% and China’s is 66%). This means there are fewer commercial incentives for rural connectivity, making it even more important to deliver adequate, efficient service – both for digital equity and for operator profit margins.

In Latin America in 2024, delegates heard, rural connectivity schemes are focusing on either fibre/LTE combination. For example, Brazilian carrier Megatelecom is partnering with local providers in a ‘we build the fibre, you deploy the mobile tech’ arrangement to reach rural areas. Or making use of the growing numbers of LEO satellites currently available.

 

Two transport innovations to deliver big capacity increases

In one panel, the audience heard about two changes in data transport that can help meet increased data demand in an efficient way. Firstly, there is potential for taking existing optical switching – where an optical field switches among two states, doubling the amount of traffic that can be send – and switching each field again, delivering a potential fourfold capacity increase on the same infrastructure. This, delegates heard, could deliver 25% more spectrum in a fibre link without additional pairs. Also, while most of the region uses the Extended C Band radio frequency, the use of Super C band is growing, which is significant as this band could be capable of providing 27% more spectrum for operators to make use of.

 

The Latin American data centre market will see acceleration

Steve Sasse from datacenterHawk shared macro insights on Latin America’s data centre market, and it made for interesting listening. Compared to more established data centre regions the market is small – the total size is around 1GW. But the next decade will see serious development the region’s core and secondary locations. A further 2GW of capacity is currently in the planning and construction stage.

Another factor for growth is that the market is concentrated in several hubs. For example, São Paulo alone accounts for 31% of the continent’s entire data centre capacity, and Santiago a further 20%. In contrast, markets such as Buenos Aires, Bogotá and Lima are currently underserved. So is Rio de Janeiro, but this will change – the city has 50MW of commissioned power at present, but 200MW more is in the pipeline. Combined with the continued growth in São Paulo and Santiago, particularly for hyperscaler self-builds, expect Latin America’s data centre market to be a lot bigger in five years’ time.

 

South America’s subsea investment cycle has returned

Infrastructure building usually runs in cycles, and submarine cables are no different. The last major wave of subsea builds in South America was 20-25 years ago – the year 2000 alone saw the launch of the three major international cables GlobeNet, South American Crossing and Americas II.

According to a subsea panel at the event this year, the investment cycle is back to ‘build’. Several big new projects are either in the planning or construction stage, including the first cross-Pacific link to South America. And this fresh investment has different characteristics from the previous wave, delegates heard – not just massively increased capacity requirements, but also different ownership structures and a shifting map of where the hubs are. But one thing that has not changed, according to one panellist, is the importance of carrier involvement to give projects reputational heft.

 

The Pacific matters as well as the Atlantic

Much of the South American connectivity discussion focuses on the Brazilian and Atlantic-facing markets – there are many more cables on this side of the continent, and as covered above, cities such as São Paulo account for a large share of the data centre market. But the current second data centre market on the continent is Santiago, and Pacific-facing markets like Chile and Peru will be a vital, growing part of South American connectivity. To illustrate, delegates heard that Google traffic has grown by over 200% in Chile over the past five years.

This makes it a good time for Humboldt, South America’s first trans-Pacific submarine cable, which was the subject of a dedicated presentation at Capacity Latam this year that delved into its ownership structure, rationale for construction, and more.

 

Collaboration is important

Finally, there was no dispute on one matter – South America’s potential is huge, but collaboration is needed to realise it. Connectivity demand on the continent will not slow down, driven by enterprise growth, streaming and energy projects as well as a gigantic future growth in AI-related needs.

But forecasting this demand is difficult – and that is just one of many reasons why several panellists spoke about the huge importance of working together. As well as plotting where the demand will go, there is the question of staying on top of an ever-shifting subsea market landscape, bringing in automation to manage operations more smoothly, whether traffic will move to new cables or stay on old ones for price reasons, and so much more. The conclusion? We need to keep talking.