KT Chairman Lee Seok-chae, right, shakes hands with Softbank President Masayoshi Son after announcing plans to set up a joint venture to provide data center and cloud services to Japanese companies, at the Bellesalle Shiodome Building in Tokyo, Monday. The data center will be built in Gimhae, South Gyeongsang Province. / Courtesy of KT

By Yoon Ja-young

KT and Softbank announced a joint venture to provide data center and cloud services to Japanese companies. The data center will be in Gimhae, South Gyeongsang Province. After the earthquake that hit Japan on March 11, Japanese companies have been looking at Korea to store their data.

According to the plan, KT will put up 51 percent of the stake, and Softbank 49, in the joint venture which will begin in September. They picked Gimhae for the data center due to its proximity to Japan and where a submarine cable between the two countries starts. The data center will be capable of operating 10,000 server computers. Until October, when the data center will be completed, KT’s data center in Mokdong, Seoul, will be used for the service to Japanese companies.

Data center safe from natural disasters

It is rare for businesses to operate server computers outside of their own country. However, Japanese companies have changed their perception since the 9.0 magnitude earthquake.

As information is crucial for operations, firms have been operating their own data centers or signed up for data management services from local service providers. However, the earthquake showed that neither option is safe from natural disasters. The failure of the data system is more fatal than the damage to company headquarters.

Hence, Japanese businesses came to consider storing data in other countries that are relatively safe from such disasters.

A shortage of electricity also motivates them to choose Korea. The Japanese government is scheduled to limit electricity usage following the damage by the earthquake. According to the plan, Japanese firms have to cut 15 percent of their electricity usage from July.

Cloud computing in Korea could be a good option as it can save on electricity. KT’s cloud computing service has improved server integration by over 50 times compared with previous data center models. The electric efficiency is also twice as high as before. When adding the green memory of Samsung Electronics, with which KT recently aligned, the firm’s cloud computing system can cut companies’ electricity consumption by over 70 percent compared with their previous systems.

The price could further go down when considering that electricity rates in Korea are only half those of Japan.

Win-win for KT and Softbank

The project is expected to be a win-win scenario for both KT and Softbank.

KT has been seeking businesses overseas and expects the move will help it become a data center hub for global companies.

“The project will break the conception that the communications business is a local industry,” KT CEO Lee Seok-chae said. KT announced plans to rise as the “cloud computing hub of Asia,” providing cloud services to 1.5 billion people in a 2,000 kilometer radius.

Softbank could also expand its business in Asia. Softbank President Masayoshi Son said that the data center services will be provided at half the price of those in Japan. It will also operate a call center 24 hours a day. “The project will protect important corporate systems and data from natural disasters such as earthquakes,” Son said.