Earlier in the summer, NEF traveled to Nebraska where the team met with clients, watched the College World Series, visited the Union Pacific railroad, and witnessed construction for Facebook’s newest data center right outside of Omaha. The impetus for the trip was an invitation to speak at the Greater Omaha Chamber’s Data Center Day, where we discussed the ways in which Nebraska is a hidden connectivity gem for big businesses.
First, looking at it geographically, the center of the U.S. is located 190 miles away from Omaha, NE. This means that a lot of long-haul routes actually route through the area on their way to either coast. According to data collected by the state, there are 8 separate long-haul network points of compass diversity traffic, more than 15 metro networks that operate in the greater Omaha area, and 20 plus data centers with plans to develop more. In fact, the provider density of Omaha is equal to or greater than cities like Phoenix, San Diego, Portland, Seattle, Minneapolis, Boston, Miami, San Antonio.
(*Pictured above are Omaha’s Metro and Long Haul Network Diversity Maps, respectively.)
This also attributes to the fact that, in general, latency from Omaha data centers is lower than those that are better known or have too much competition for traffic.
Cost of Doing Business
In terms of construction in Nebraska, there are very few places that combine the connectivity necessary with a cost of construction that is below the national average. Coupled with a low labor cost, Omaha-area data center builds are more affordable than in most cities.
When it comes to taxes, in 2014, KPMG calculated a tax index of 70.1 for Greater Omaha (as compared to the U.S. baseline of 100.0), which means that Omaha has a tax climate nearly 30 points better than the nation as a whole.
The region ranked 4th in the nation in lowest total effective tax rate, 5th in corporate income tax, 12th in statutory labor costs, and 17th in other corporate taxes, including property and sales taxes.
The top three critical systems for any data center include power, cooling, and network connectivity. Omaha’s electricity fees cost around 80% of the national average. Considering data centers must have full redundancy for all critical systems, these power savings can greatly impact the bottom line. For example, commercial electricity fees per kilowatt hour cost 8.40 cents/kWh in Omaha, NE, whereas the national cost is 10.29 cents/kWh.
In an ideal world, data centers would not be constructed within an area known for natural disasters. The greatest climatic threats in Omaha are associated with tornados and floods. It should be noted that other popular data center locations, including Dallas, New York City and New Orleans all have high natural disaster risk profiles.
Overall, having the opportunity to brain-share with some of the Fortune 500 businesses who came out to learn from the event was insightful. Attendees included companies like Yahoo, Facebook, Microsoft, CBRE, and other key influential political figures in and around the region, all of whom were interested in bringing more business to Nebraska. It became clear that these companies were at the convention to learn all they could about the options they would have in Nebraska, and the state worked very hard to gather experts and political figures to make the conference well-rounded and reputable. The Greater Omaha Chamber Data Center Day definitely made a very good case for why companies should be considering Nebraska for their future data center needs.
(Pictured above from left to right: Facebook’s data center construction site, John Pomposello and Mike Murphy in front of the Union Pacific Railroad, John Pomposello and Patrick Ellis at the College World Series.)