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In stark contrast to the previous regime, the new Parti Québécois government is pulling out all the stops to entice companies into locating their cloud-computing and data operations in the province. (Design Pics)
In stark contrast to the previous regime, the new Parti Québécois government is pulling out all the stops to entice companies into locating their cloud-computing and data operations in the province. (Design Pics)

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Big Data, Quebec is calling.

In stark contrast to the previous regime, the new Parti Québécois government is pulling out all the stops to entice companies into locating their cloud-computing and data operations in the province.

The policy flip-flop represents a change of heart from the stance of the former Liberal government, which looked askance at the prospect of giving tax breaks or cheap electricity to sprawling data centres that are not exactly known as bounteous job creators.

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Quebec is touting its cool climate, plentiful water supply, relatively cheap, clean and reliable electricity supply and attractive high-tech talent pool as reasons that make the province the ideal place for the high-heat generating, energy-hungry data warehouses.

“We have the knowledge, the climate, the hydroelectricity and there is a huge demand for the infrastructure needed in cloud computing,” said Industrial Policy Minister Élaine Zakaïb. Once a data centre is established it will act as a magnet for related high-tech activities, she believes.

Ms. Zakaïb views data farms as having potential similar to that of Montreal’s thriving, government-backed video-game development cluster, one of the world’s biggest.

Creating lots of jobs in the data-processing sector isn’t necessarily the goal, she said.

“It’s important to create good jobs in Quebec, as well as further develop the knowledge base so that it can take us into other promising sectors,” Ms. Zakaïb said in an interview Tuesday after announcing a $400,000 subsidy to Vert.com Inc., a Montreal startup that is spending $1.05-million on development of a high-density, low-energy-consumption data centre.

Éric Mateu, Vert.com’s chief executive officer, said he is confident the government’s approach – particularly its new budget provision giving a 10-year corporate tax holiday to companies that invest more than $300-million in new data-centre projects in the province – will help make Quebec into a global player.

“There is a commitment on the part of the government to encourage the data-centre industry,” Mr. Mateu said. “There are big projects in the works,” he added, declining to provide details because they are still in the early stages.

Ms. Zakaïb said the government is also open to discussions with companies regarding lower hydroelectricity rates from Hydro-Québec, something that in years past government was reluctant to do.

She said a ministerial committee has been formed that includes Premier Pauline Marois, Hydro-Québec chief Thierry Vandal and Natural Resources Minister Martine Ouellet. The committee will examine the possibility of rate cuts on a case-by-case basis, Ms. Zakaïb said, noting that the province already boasts some of the lowest energy rates in North America and clean, reliable hydroelectric power. A low carbon footprint and high-security energy supply are increasingly important factors in data-warehouse site selection.

Bill St. Arnaud, an Ottawa-based Web consultant who follows the data-centre business closely, said a tax holiday alone likely won’t be enough to attract the big players, such as Google – which sniffed around but passed on locating a centre in Mirabel several years ago – and Facebook.

Most big companies are really after significant discounts on energy, which represents a big chunk of their costs, but even if lower rates were front-and-centre in Quebec’s marketing campaign the timing is poor because low natural-gas prices in the U.S. now make for very cheap electricity from gas-fired plants, he said.

Meanwhile, on a smaller scale, Quebec is proving attractive to companies building new data centres.

Earlier this month, Telus Corp. opened a $65-million data centre in Rimouski, the company’s third facility in Quebec, while also earmarking an additional $13-million for information technology infrastructure.

François Gratton, president of Telus Quebec and Atlantic Canada, said there are longer-term plans to expand that facility by adding up to six more wings over the next 20 years to keep pace with growing demand for data hosting and accompanying security services.

“This is like Fort Knox. It is a really secure, physical data centre,” Mr. Gratton said in an interview.

Moreover, the ultra-modern facility, which will eventually cover an area spanning the space of two football fields, is expected to be energy-efficient due to Rimouski’s cool climate. Telus didn’t receive funding or tax credits from Quebec, he said. “It is really based on market demand – customer demand – and a financial business case to support it.”

Cogeco Cable Inc. has also been ramping up its presence in the business services market with data centres in Toronto and Vancouver and plans for others in Ontario and Montreal. But since the company is spending close to $100-million over 10 years for its Montreal facility, set to open in the summer of 2014, “we wouldn’t be able to take advantage of that tax incentive,” said Tony Ciciretto, president of Cogeco Data Services.

For large telcos such as Telus and Bell, data-hosting services represent a relatively small but growing revenue stream. Research firm IDC Canada estimates that Telus earns roughly $150-million a year from hosting services, while Bell pulls in about $105-million.

“Aside from mobility, it is probably their fastest growing market,” said Mark Schrutt, director of services and enterprise applications at IDC.

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