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Companies Consider Web Hosting in the Bahamas and Beyond to Avoid US Government

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Last week, Microsoft was found in contempt of court for refusing to hand over customer emails stored in its data center Dublin, Ireland, to the US government. The company contends that the data cannot be accessed with a US search warrant, but prosecutors argue that since Microsoft – a US-based company – owns the data center, it is fair game.

The issue reflects broader user concern that data hosted with a US-owned company but stored in a different country (Ireland, for example) can still be accessed by the US government. This concern has led some businesses to forgo doing business with US-based service providers all together, and instead look for providers based in countries where there is more stringent rules around government data collection.

One of those countries is a location that you may have considered for a family vacation, not necessarily for web hosting. But compared to other countries in the Caribbean, the Bahamas has a solid internet infrastructure, and favorable jurisdiction around data privacy.

Richard Douglas moved to the Bahamas from Canada in the 1990s to explore opportunities in the IT space. By the late 90s, data centers were built, and the local phone company and cable company started providing high speed internet. In 2001, Secure Hosting CTO Douglas co-founded the hosting company.

“I actually tried to go to other countries besides the Bahamas to look at opportunities but there were no reliable internet connections,” Douglas said. “Bahamas was really the only country that had set up subsea fiber and high speed internet that we were used to in North America. It’s very close to the US so it was easier to set [a hosting company] up there.”

Around the same time that Secure Hosting was launched, the Bahamas government brought together stakeholders including telecoms, legal community, and the audit and accounting community to contribute to regulations around data protection.

“We probably spent a year or a year and a half with many meetings to discuss what legal framework would be required to protect the data that is in the Bahamas, as well as encourage local business to go on and adopt the internet and trust it as a way to do ecommerce, and international companies to look at the Bahamas as a place where they could come and set up an operation,” Douglas said.

“The result of that consultation between the private and public sectors was the government ended up creating a data protection law and a privacy law which specifically addresses personal privacy and protection of corporate data in the Bahamas,” he said.

Secure Hosting isn’t the only web hosting provider in the Bahamas, but it is one of a handful of providers, including Maxil.

In 2003, the Bahamas passed The Electronic Communications and Transactions Act 2003 and the Computer Misuse Act 2003. The government also passed the Data Protection Act 2003. The latter ensures that data stored in the Bahamas is not transferred to any other country.

“The Microsoft case really [highlights] the reasons why you should be careful where you put your data,” Douglas said. “And we aren’t the only solution in the world.”

Indeed, there are many providers that offer offshore hosting, and locations including Switzerland and Panama.

“We go to shows all the time, cloud shows and finance shows, and a lot of companies don’t understand that when they’re hosted with Google or Amazon or Microsoft or Rackspace in London or Singapore that they’re really under US jurisdiction,” he said. “There’s a lot of companies in Europe or Asia who mistakenly feel like they’re dealing with the local version of Amazon or Rackspace and not the US version.”

Douglas recommends that companies choose who they host with – and where – very carefully; “if your business is that important and you have business data or confidential data or intellectual property, it may not be protected by US providers.”

Hosting customers should ask where a providers offices are located, and whether they have a sales office in the US since that still counts as a US presence, Douglas said. Customers should also inquire about company executives and the board of directors, because those people may be American and therefore may be under jurisdiction in the US.

Douglas said many of Secure Hosting’s clients are financial institutions, and use its data centers as their primary location or a satellite office. Secure Hosting has data centers in Nassau and Freeport, the latter of which it opened last April.

“A lot of organizations are afraid of the Patriot Act,” Douglas said. “It’s a conversation that comes up all the time. A lot of organizations, whether they’re from Europe or Asia, are afraid of the Patriot Act and are looking for a way to do business without having to get caught up or involved in [it].”

Local companies use Secure Hosting’s services for disaster recovery and data continuity. Douglas said, “there’s obviously storm concerns in the Caribbean and they’re overrated, to be honest with you. When a hurricane comes it doesn’t affect us, the data center is built for that.”

Insurance companies and government agencies also use Secure Hosting’s data center to meet regulatory compliance.

And it’s not just favorable jurisdiction around privacy – there is also Bahamas’ tax-free status. According to Secure Hosting’s website there are no taxes levied on capital gains, corporate earnings, personal income, sales, inheritance or dividends.

While the white sand beaches of the Bahamas or Panama make great destinations for vacations, soon more companies may think of them as destinations for their data.

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About the Author

Nicole Henderson is the Editor in Chief of the WHIR, where she covers daily news and features online. She has a bachelor of journalism from Ryerson University in Toronto. You can find her on Twitter @NicoleHenderson.

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