Small Town Virginia

Rural Virginia Lands Microsoft; Deal Represents Largest in Southern Virginia History

By Lee Burlett

In the summer 2010 quarter, Microsoft selected a site near Boydton, Va. for a $499 million data center project. The deal in Boydton/Mecklenburg County, which is located in rural Southside Virginia, is the largest single economic development investment in Southern Virginia history. Microsoft will build the latest generation data center (Gen4), using modular technology and advanced cooling mechanics. The center will serve as the East Coast hub for Microsoft's online services.

The battle to land the next generation data center went on for about six months in the first half of 2010. Near the end of the site selection process, Microsoft was still looking at Texas, North Carolina and Virginia. But two sites made the short list, one in Western North Carolina where Google and Apple operate large data centers and the Boydton/Mecklenburg County, Va. site.  Although Virginia lost out on the Apple and Google centers that landed in rural Western North Carolina, it won out on the Microsoft deal.

Of late, the competition between North Carolina and Virginia for data centers has been keen to put it mildly. With the Apple project appearing to favor Virginia early on, North Carolina lawmakers immediately passed a state incentive package that put another $3 million on the table for Steve Jobs' incredibly successful company. Local officials in Western North Carolina upped their package to $7.3 million and Apple's management changed tracks and picked rural North Carolina.

In turn, after losing out on the Apple project, officials in Virginia adopted new incentives explicitly for data centers, offering an exemption from certain sales and use taxes for computer equipment. Plus, Southside Virginia already had the infrastructure -- large water and electric power capabilities -- in place as a result of a super-secret data center that is being operated by the federal government there. 

The Boydton site is located near that large federal government data center that began operations two years ago. That project is so secret that economic development directors, politicians and other officials in Virginia to this day cannot comment on it in any way because of strict confidentiality agreements. Regardless, the project is widely known as one that is run by the Department of Homeland Security.

Microsoft's half a billion dollar data center being built in rural Virginia is part of the company's Windows Azure cloud computing platform. Already the company has built four massive data centers in Dublin, Ireland, San Antonio, Chicago and Quincy, Wash. in support of the company's cloud computing program. All of the new cloud computing data centers are about 500,000 square feet and represent billions in capital investment.

In a press release by the Virginia Economic Development Partnership on August 27, 2010, Virginia Gov, Bob McDonnell said, "Microsoft is a household name and securing this global project is a significant economic win for Virginia. The company's search process was long and competitive, and a great team of players came together to show Microsoft that Mecklenburg County was the right fit for its new version of a state-of-the-art data center. This project represents the largest investment project in the history of Southern Virginia," McDonnell said.

Governor McDonnell approved a $2.1 million grant from the Governor's Opportunity Fund to assist Mecklenburg County with the project. The Virginia Tobacco Commission approved $4.8 million in funds and the Virginia Department of Business Assistance will provide training assistance through the Virginia Jobs Investment Program. In addition, the Virginia Economic Development Partnership worked with Mecklenburg County and the Town of Boydton to secure the project for Virginia.

As important, though, the Mid-Atlantic Broadband Cooperative (MBC) provided invaluable assistance to make the project possible. MBC's open access fiber optic network that is present throughout rural Southside and parts of Southwest Virginia was a key component in Microsoft's decision to locate in rural Virginia. MBC's broadband network in rural Virginia provides diverse fiber routes for connectivity to major carrier interconnection points in the Eastern U.S.

"We are very proud that our advanced fiber optic network will support the high capacity, diverse routing and low latency requirements of Microsoft's new data center at the GigaPark in Boydton, Va., said Tad Deriso, President and CEO of the Mid-Atlantic Broadband Cooperative." Our GigaPark's are a perfect example of how private sector companies like Microsoft can benefit from an advanced telecom infrastructure in a region with a low cost operating environment."

This article was sponsored by Old Dominion Electric Cooperatives