- Open DC is betting that a Malaysia internet exchange at the Kedah border can keep regional traffic out of Singapore.
- The operator frames data centres as an energy-export business and is pushing cooling-knowledge transfer to local vendors.
Four cable landing stations sit within reach of Bukit Kayu Hitam in Kedah: two in Malaysia and two across the border in Thailand, at Satun and Songkhla, roughly 50 to 60 kilometres apart on opposite coasts. Traffic arriving at those stations today largely travels to Bangkok, or down to Kuala Lumpur and Singapore, before it can be exchanged.
Open DC is building an internet exchange at that border on the argument that it should not have to. The company launched D8-1 in the Delapan Special Border Economic Zone after being invited four years ago to replicate, at the northern frontier, the model it had already built in Johor Bahru. The site takes its name from Delapan, the Malay word for eight, because the company wanted something tied to the place, managing director Wong Weng Yew said at a media briefing in Kuala Lumpur on Monday.
The Johor exchange helped pull Singapore players across the Causeway, Wong said, and the northern project is the same play aimed at Thai and Chinese traffic. Johor also had Singapore’s moratorium and land constraints pushing demand north, which the Kedah project has no equivalent of.
The company’s parent, Extreme Broadband, is a licensed Malaysian telco that has been selling enterprise connectivity since 2005. That history explains a pitch built on carriers and peering while most of the market talks in megawatts.
What a Malaysia internet exchange changes
An internet exchange is a shared point where networks hand traffic to each other directly instead of paying a third party to carry it. Open DC already runs or hosts them at its other sites, including JBIX in Johor and a transport node for DE-CIX Malaysia’s Penang Internet Exchange at PE2, which makes D8-1 a repeat of a model the company has built before rather than a first attempt.
Wong described the model in terms of air travel. “What we are doing essentially is like building an airport,” he said, adding that airlines bring passenger traffic into a hub where passengers change flights, and networks do the same with traffic at an exchange.
The savings come off the transit bill. Leasing a 10G link from Delapan down to Singapore would cost in the region ofRM100,000 a year, Wong said, describing the figure as indicative. Traffic exchanged locally at a northern exchange avoids that line item, and the cost falls further as more networks join and more traffic stays in the north.
Wong’s case is that traffic landing at Satun or Songkhla and destined for elsewhere in the region has no technical reason to detour through a hub several hundred kilometres away, which adds both cost and latency.
The count of carriers inside a facility is what makes that possible, and it is where Open DC’s numbers are unusual. Two carriers are considered good for most enterprise sites, Wong said, while Open DC’s data centres typically carry at least six and JB1 in Johor has more than 15. Tenants can buy connectivity from Chinese, Singaporean, European, Indian and US telcos without leaving the building, a mix he said is almost impossible for other operators to replicate.
The exchange at D8-1 is not fully live. Wong said a capacity upgrade prompted by demand pushed the rollout back by several months, with a full launch targeted for the end of this year or January. He declined to name the networks waiting to connect, citing non-disclosure agreements. The project was conceived four years ago, which makes the launch a fair measure of how quickly regional traffic shifts once a new exchange opens.
Complementing rather than competing
Thailand has drawn substantial hyperscale investment, and Open DC’s Kedah capacity, at 2MW expanding to 4MW, is not in that contest. Wong said the aim is a connectivity hub serving the wider region rather than a play for the Thai market, and that Thai networks connecting at the border would reduce what they send to Singapore and pay less to do it.
He made the same argument about Singapore. Cable density concentrated in one small area creates a chokepoint, and northern Malaysian capacity gives networks somewhere to park a second copy of their traffic. “If something happens to the south, the north will carry on,” he said.
Open DC’s own portfolio runs from JB1 and JB2 in Johor through CJ1 in Cyberjaya to PE1 and PE2 in Penang and D8-1 at the border, a north-to-south corridor Wong said no other operator is developing. More than 90% of its business comes from overseas customers, he said, with a recent surge in East Asian traffic, drawn from a base the company puts at over 300 organisations, including Fortune 500 names.
Compute as an export
Wong put a different frame on what his industry sells, describing it as “an energy export business”. A data centre takes power generated in Malaysia, converts it into compute capacity, and sells that capacity to foreign customers who pay in US dollars.
He does not expect the industry to keep growing on fossil generation, and said siting capacity in the north lets Open DC tap renewable options there. He put rough numbers on what that would involve, saying that supplying 15% of PE2’s electricity from solar would mean signing a contract with a solar provider worth around RM150 million. He stressed that the company is still debating the level and has not committed.
Solar developers need long tenures to build, and Wong said few buyers are willing to sign a 10-year commitment. He named battery energy storage as a second area where data centre demand pulls research and development into the country.
Building vendors rather than importing them
On talent, Open DC’s approach runs through its supply chain. Wong said the company selects local vendors and places them alongside global equipment suppliers, then requires those suppliers to transfer knowledge and train the local firms as part of supplying Open DC.
Precision cooling is the example he gave. AI workloads impose demanding cooling requirements, and the systems involved are ones local vendors rarely get to work on unless a customer creates the opening. “Hopefully we can sow a seed in the local market that we can grow into a tree of talents in the local communities,” Wong said.
The financing history suggests why he emphasises local capability. Wong said Malaysian banks were unfamiliar with data centres when Open DC started in 2015, and that one of its first funders was a Singaporean infrastructure fund. Alternative lenders moved before the banks did, and he said many local institutions remain hesitant today.
Whether the Malaysia internet exchange delivers depends on the networks Wong says are waiting.
Want to learn more about AI and big data from industry leaders? Check out AI & Big Data Expo taking place in Amsterdam, California, and London. The comprehensive event is part of TechEx and is co-located with other leading technology events, click here for more information.
Tech Wire Asia is powered by TechForge Media. Explore other upcoming enterprise technology events and webinars here.
The post Why Malaysia’s internet exchange build-out is moving to the Thai border appeared first on TechWire Asia.