By Conor Humphries and Tarmo Virki
DUBLIN (Reuters) - Ireland and Iceland are seeking to fuel their hard-hit economies and exploit their position on the western edge of Europe with new data centers to be connected via a new, $300 million transatlantic telecoms cable by 2013.
Irish Prime Minister Enda Kenny unveiled the project -- which Ireland hopes will help in its ambition in becoming a global hub for cloud computing -- on Thursday at Dublin Castle.
"This will give great connectivity around the whole country, which is vitally important for attracting high tech investment in the future," Irish government spokesman Tom McLoughlin said.
Demand for remote data centers is increasing, boosted by the rising trend of so-called cloud computing, where information is stored and processed at massive remote data centers.
Ireland's temperate climate suits the centers, which require huge amounts of power to run and to prevent from overheating.
Iceland, located between North America and northern Europe, and recovering from its own economic crisis, hopes the new, larger cable will help it to benefit from its renewable hydro and geothermal energy resources for data centers.
Google Inc is building a data center in Dublin and Microsoft Corp already has one in the city.
The centers would bring much-needed investments and new jobs to the country which fell victim to a severe recession after a property crash and bank sector meltdown.
It has won international plaudits for meeting its goals under an 85 billion euro ($114.4 billion) EU-IMF bailout but needs its domestic economy to start growing again if it is to convince investors that its debt burden is sustainable.
U.S.-based startup Emerald Networks Inc on Thursday joined a race to build the first new transatlantic telecommunication cable since 2003, linking Ireland and Iceland to North America.
Two other transatlantic projects, Hibernian Express and Wasace, are also in the works, but using different routes.
The company has raised the first $5 million from the Welcome Trust and has appointed investment bank Jefferies & Co Inc to complete the $300 million fundraising.
"We are very confident that in the current economy we are going to make it," Ray Sembler, CEO of Emerald Networks, told Reuters in an interview.
Emerald seeks to raise $20 million to $25 million of equity this year, which would be enough to start the project, Sembler said, while in the first half of 2012 it aims to raise at first some $100 million more in equity and then $150 million in debt.
It has picked TE SubCom, a unit of U.S. firm TE Connectivity, to supply the cable and install it.
As existing cables in the Atlantic are aging, Emerald is seeking to first grab a share of their data traffic and then focus on growing through serving data centers.
Research firm Telegeography sees demand for transatlantic capacity increasing nearly nine-fold between 2010 and 2017, but it says current capacity is not being fully used.
"Less than 20 percent of potential capacity is in service today ... (the) likelihood of exhaustion is a far-off point," said Alan Mauldin, analyst at Telegeography.
Mauldin says the opportunity for Emerald lies in linking new locations, like Iceland, with a fast connection.
Sembler said a few dozen Forbes 500 companies have already studied setting up a data center in Iceland.
One of the first global players to move there has been Norway's Opera Software, maker of world's most-used mobile browser, which opened its Iceland data center last year.
Trygve Jarholt, director of hosting at Opera, said so far the few cables to Iceland have been enough.
"A new cable is always welcome ... more capacity means more room for growth," he said.
Internet groups are trying to use Nordic locations to benefit from natural cooling, with Facebook building a center in Sweden and Google opening a data center in Finland on the site of an old paper mill.
"There are going to be some people who will use Iceland for data centers, but it's not going to be the only place to benefit from green energy demand," Telegeography's Mauldin said.
($1 = 0.7429 euros)
(Additional reporting by Carmel Crimmins; Editing by Andrew Callus and David Holmes)
This story corrects the cable supplier name in paragraph 15 to TE SubCom