Q2: Minister Perez, we were impressed by the projected growth of Peru's public cloud market, which is expected to reach $1 billion this year and continue growing at a double-digit rate until 2028. How is Peru attracting this scale of investment, and what support does Peru or other developing countries need from development partners like the IFC and the World Bank?
A2: Peru is actively working to expand its data and cloud infrastructure market, driven by the adoption of digital technologies and cloud-based services in various sectors. This growth is supported by the implementation of 5G networks, AI, the Internet of Things, and big data, as well as digital transformation in general.
To sustain and accelerate this growth, support from development partners is crucial, especially in terms of technology investment and capacity building. Stakeholders can help improve existing infrastructure, develop new data center capabilities, and implement regulations that facilitate investment and operation of cloud services. International collaboration and the exchange of technical knowledge are essential to strengthen the local market.
Peru's government has launched a national digital transformation policy to promote digitalization across economic and social sectors. This policy includes regulatory frameworks to increase trust in cloud services and data infrastructure, with a focus on personal data protection and cybersecurity.
Q3: Minister Perez, how is Peru considering the potential for regional integration of cloud and data markets in Latin America, especially given that low- and middle-income countries currently account for only 25% of global data center capacity?
A3: The key factors driving the growth of the cloud infrastructure services market include cost reduction, scalability, flexibility, and security. These services enable rapid development and execution of applications and processes. Regional integration is seen as a fundamental strategy to attract investment and improve technological capacity across Latin America.
For example, the South Pacific submarine cable, implemented in 2021, connected Peru with other countries in the region, improving connectivity and capacity. However, challenges such as regulatory diversity between countries, the need for significant investment, and concerns about data sovereignty and security must be addressed.
Overcoming these obstacles requires coordinated efforts to establish standards, encourage cross-border investment, and ensure effective data protection policies. Peru, like other developing countries in Latin America, views regional integration as a strategy to attract investment and address challenges related to limited data center capacity.
Q4: Marcos, what incentives could encourage smaller markets to consider regional data centers, or would they still prefer to attract individual investors like yourself despite data sovereignty concerns?
A4: That's a very good question. When we think about the internet and the benefits that connectivity has brought us over the past 20 years, we should think similarly about the cloud and AI. Connectivity depends on the level of connectivity a country can provide. When it comes to the cloud, it's all about latency—the time it takes for data to travel and return. Unless you can change the speed of light or wave propagation, you need to be closer to where the data is captured and consumed.
The size of the cloud market for each country is connected to its development level in other dimensions, such as financial systems, government services, and retail. I don't see a small country becoming a major player in the data center landscape if it doesn't have a strong economy. But AI could change this dynamic by enabling new business models and applications, similar to how Africa leapfrogged to 3G telecommunications. Investments in education and professional training will be crucial to drive economies forward.
When it comes to infrastructure, AI can be split into training and inference. Training requires significant data processing, which can be done anywhere with ample power and infrastructure. Inference, which uses smaller data sets, needs to be close to where data is accessed. This presents an opportunity for countries like Brazil and Chile to become global hubs for AI training, leveraging their existing power grid and infrastructure.
Q5: Marcos, you mentioned that sustainability is a must-have rather than a nice-to-have for your company. How do you ensure your data centers remain sustainable, and are there any regulatory barriers that you face in this effort?
A5: For us, sustainability is not just a strategy; it's a commitment. For example, in Mexico, we could have at least 100 MW of capacity, but we currently have only five because we couldn't rely on the grid's renewable energy sources. So, we decided not to expand there and instead focused on Chile.
We only build data centers that can be sustainable, meaning zero water usage and 100% renewable energy. Scala was the first data center company in Latin America to operate with 100% renewables from day one, and the first in the Americas to achieve carbon neutrality certification. By setting this new standard, we've forced the market to follow our lead, even though renewable energy is currently more expensive.
The good news is that major companies like Microsoft, Amazon, Oracle, and Google also prioritize sustainability, which drives the entire industry to adopt these practices. However, as the demand for AI grows, the challenge will be maintaining these sustainability standards, especially when energy becomes scarce.
The industry needs to invest in renewables, improve the grid, and develop more efficient battery technologies. We must also consider alternative energy sources, such as nuclear power, to ensure that the growth of data centers is sustainable. If we don't address the infrastructure challenges now, we risk losing five to seven critical years of progress in sustainability.
Q6: Minister Perez, how does Peru plan to integrate its national infrastructure with the broader Latin American region to enhance data transmission and connectivity?
A6: Peru has a national fiber optic network that interconnects 108 provinces through 13,000 km of fiber optics and 3,322 points of presence across the country. Additionally, regional projects have increased the deployment of fiber optics by 27,500 km, totaling around 45,000 km. This infrastructure allows high-speed data transmission and positions Peru to integrate its networks with the broader Latin American region.
However, regional integration will require significant investment in the construction and improvement of telecommunications and data center infrastructure. Countries must be willing to collaborate on joint infrastructure projects and create incentives to attract private investment. The goal is to harmonize policies and regulations related to data infrastructure and the cloud, which will involve overcoming differences in regulatory frameworks, data protection regulations, and cybersecurity across the region.
