Paul Brislen: Rio exit could have a silver lining

The Tiwai Pt smelter uses about 14 per cent of the country's electricity output. Photo / Grant Bradley

Cloud computing data centres could make use of New Zealand's capable workforce, cheap power and land.

Rio Tinto isn't going to get a deal out of the Government and is likely to shut down the Tiwai Pt aluminium smelter potentially at the cost of thousands of jobs over the next five years.

This is very good news for the economy and, ultimately, is the best outcome we could have hoped for on a number of levels.

The smelter uses a lot of electricity - roughly 14 per cent of the national output - yet its value to the country as a whole is not in keeping with that resource use.

Having that much electricity dumped on the market is sure to lower the retail price for most business users, as well as consumers, in the foreseeable future, but what if we found a different use for it?

Currently one of the big trends in the ICT sphere is for cloud computing and this has led to a phenomenon known as big data. Both those terms need some consideration.

Cloud computing at its most basic level means storing your data out there somewhere. It's a nebulous term, involving lots of arm waving, 'You know, out there', hence the name.

But all that data - be it music, movies, spreadsheets, word processing files, pictures of your cat, business plans - has to reside somewhere and typically that's with a giant data host, such as Google, Microsoft, Apple or some of the new players like our own Xero or Dropbox or even Kim Dotcom's Mega.

The data isn't just floating around, it's stored in a data centre and data centre development is big business. Facebook and Apple have just opened giant data centres in Prineville, Oregon (population 9253), a town nobody has ever heard of.

The reason? It's cold, which helps keep the cost of air conditioning down, it's remote, it has a guaranteed power supply, there's lots of water nearby (good for water cooling which data centres need in a big way) and other data centres are nearby, meaning there's a pool of already trained staff able to work in them.

Prineville isn't alone - Quincy in Washington state (population 7000) has five such data centres (Microsoft, Yahoo, Intuit, Dell and Sabey Corporation) with another one coming online shortly.

You've probably heard of Microsoft and Yahoo but Sabey? I've got no idea what they do but they need a big data centre and they're willing to build one to keep customers happy.

These small towns, and there are plenty more, have made it their business to go after this kind of industry for several reasons.

The data centres' needs fit well with their own capabilities and they generate jobs and income for the region.

Data centres employ anywhere from 100 to 300 staff each, but they spawn an entire industry of affiliated businesses - companies that want to access the data quickly, work with data centres on a physical basis and so on.

Big data - the ability to sift through massive data sets to seek out trends and analyse information on a global scale - is the next big wave to hit the ICT industry and New Zealand could be well placed to take advantage of it.

We have cheap electricity and cheap land. We have a trained, capable workforce and we have political stability and a remote location - all very desirable attributes for a data centre.

We also have sustainable, green electricity.

Oregon data centres are typically 60 per cent coal-fired, with 40 per cent nuclear and the companies that build them are under tremendous pressure to clean up their act.

We can absolutely help with that. All it takes is a vision and a willingness to walk away from a smelting business which doesn't make money and which requires corporate handouts to keep going.

We need to encourage these companies to consider New Zealand. We need to repurpose the 14 per cent of our national electricity output for this kind of business. We need to encourage our kids to take up ICT skills at high school, polytech and university (and beyond) and we need to go out there and invite these companies to consider New Zealand as a destination.

There are technical challenges. We are a long way from market, typically North America, and that causes latency - the lag between someone in LA clicking the mouse and a server in New Zealand responding - but these days there are plenty of ways around that. I won't bore you with multi-threaded downloads and the like - suffice it to say there is a way to cope with distance.

We have the electricity, we have the credentials, we just lack the political will to make the tough call.

I'd like to see a digital strategy from the Government that treats ICT as an economic platform rather than a niche activity. It just needs co-ordination and a plan, and we could have a clean, green sustainable industry that rivals dairy farming in terms of its worth to the economy. That's the true legacy of Rio Tinto's exit.

Paul Brislen is chief executive of the Telecommunication Users Association of New Zealand.