There is so much buzz right now among politicians, interest groups and the press around data centers in America. Some of the concerns have, unfortunately, even resulted in violence. Amid all this buzz, NetChoice’s new blog series, Data Centers 101, will get back to the basics: what data centers are, why they are needed and what they bring to the communities that welcome them.
What is a Data Center? The Brick-and-Mortar of the Digital World.
Put very simply, a data center is a building that houses IT infrastructure and data for digital services and applications – the “cloud.” The core components include servers with storage arrays and AI chips, switches, routers and fiber-optic cables, all to connect your devices to your photos, videos, messages, documents and applications like banking and e-commerce.
There are a few different types of data centers. Some companies build their own “enterprise data centers” to serve the business and its customers. For example, JPMorgan Chase operates its own data centers to support secure payments, fraud detection, trading systems and customer account data. Online services like Amazon Web Services, Meta and Google have enterprise data centers that are so large we call them “hyperscalers,” some of which host multiple tenants. For example, Amazon Web Services‘ hyperscale data centers are being used to identify cancer subtypes and predict patient survival from genomic and imaging data.
Some agencies in the federal government, such as the Defense Department, also have their own data centers, while others rent data center space from hyperscalers that host multiple customers. And there are edge data centers, which are smaller facilities located closer to their customers. DISH Wireless deploys regional edge data centers that process 5G traffic closer to subscribers, improving emergency communications, connected vehicle response times and mobile performance in local markets.
Why Do We Need Data Centers?
Think about all of the things you access through your phone and computer. Your family photos, notes, emails, digital documents, scribbles and screenshots don’t actually reside in the clouds; they’re stored and connected to you in data centers, which function as the brick-and-mortar of the digital world.
Everything that uses the internet, from the cars we drive to the businesses we operate to manufacture, create and sell goods and services, requires data centers to operate in the 21st century.
At NetChoice, we describe data centers as the backbone of all digital infrastructure and economic activity. Any conversation around data centers needs to start with this basic, critical fact.
Demystifying Data Centers
Unfortunately, this reality is often brushed aside by activists who would rather stoke fear about AI and environmental impacts, often using social media. Ironically, all of their content is also stored and shared via data centers. But why all the confusion and mystique?
Because they are the basic infrastructure of our digital economy, data centers have been operating and expanding across America for the past 25 years without much attention or concern. In fact, communities with data centers were quite happy with the jobs and property tax relief they provide. However, 2025 saw a dramatic rise in questions about electricity use by data centers, despite studies showing that large data centers shoulder a growing share of utilities’ fixed costs, which reduces demand charges on residential electricity bills.
Prior to 2020, U.S. electric utilities deferred spending on infrastructure replacement during two decades of flat demand growth, while regulators pushed utilities to switch from gas and coal to solar and wind for power generation. Consequently, 70% of transmission assets are over 25 years old, and resilience spending on aging infrastructure is the primary cause of current rate increases.
Another factor in rising concern about data centers may be rooted in Americans’ fears that AI will displace jobs and generate rapid change and uncertainty in other aspects of life. While some AI anxiety is understandable, AI won’t be delayed by just blocking a new data center in their community. What’s needed is an appreciation for the current and potential benefits of the digital tools that data centers enable, and the new jobs and tax benefits of having a data center nearby.
A Data Center Anecdote
In the early 1990s, the town of Ashburn in northern Virginia was so thoroughly rural that its high school was mocked by rival schools as “Cornfield High.” Farms and dairy pastures lined the roads, and nobody much thought about the place.
But underneath that pastoral land was something extraordinary: the densest tangle of fiber-optic cable in the world, a legacy of Pentagon-funded research networks that stretched back to ARPANET in the 1960s. One of the earliest internet exchange points was funded by ARPA, a U.S. government agency based in Virginia, which developed the first interconnected packet-switched network. That federal infrastructure didn’t go away; it just waited, quietly buried in Loudoun County soil.
In 1998, a startup called Equinix built a data center in Northern Virginia to serve America Online and other companies. This was a novel concept at the time as a building that would store data for multiple entities had yet to become a norm. The idea seemed strange to build a warehouse that stored invisible things. The Equinix campus quickly became the web’s busiest meeting place, creating a powerful network effect in which each new connection added to the value of its digital ecosystem. Today, we know this area as Data Center Alley, home to the largest concentration of data centers on the planet.
Conclusion
Data centers are essential infrastructure for the modern economy. Without them, online tech tools that we use every day would simply fail to function. This does not just apply to AI—it includes your laptop, your smartphone, your smartwatch and everything that’s connected to the internet. Data centers that serve Americans should be based here in America, so that we can reap the benefits of infrastructure investment, new tech jobs and property tax relief for homeowners.
This series will dig into the basics of data centers, including who builds them, who works there, how much they pay in taxes and how they support communities. We’ll also explore controversies around their use of electricity and water. We look forward to demystifying data centers so America can continue to lead the world’s digital economy.