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How Do Colocation Data Centers Work?

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Colocation is a data center where you can rent space for your servers and other computing hardware. It offers cooling, power, physical security,

Providing storage and servers is the responsibility of customers. They will lease the space by the cabinet, cage, room, or rack. Some vendors also provide managed services to help customers with their business initiatives.

Businesses prefer colocation over building personal data centers for many reasons. However, the primary reason is the capital required to build, maintain, and update a large facility. Private enterprises used colocation data centers in the past for disaster recovery. These days, colocation data centers are more famous with cloud service providers.

Most Important Colocation Features

All colocation businesses have their mechanisms and procedures. So all may have some unique features. However, here are some standard features:

  1. Physical security and durability
  2. Cross connectivity
  3. Guaranteed reliability
  4. Redundant internet connectivity
  5. Redundant power
  6. On-site technical support
  7. Compliance with various regulation

Advantages of Colocation

Businesses can enjoy many benefits by utilizing colocation services. Here are some of those significant advantages:

  • It is costly compared to building your own data center. 
  • You can use the server and other hardware of your choice.
  • You get protection from cyber attacks.
  • You get on-site technical support. 
  • Colocation also offers additional data center space to help you in case of growth.

Building and Facilities

All data centers are also not the same, just like office buildings. Some differences are in the construction of data centers and some in operational efficiency. In most cases, data centers offer SLA that guarantees a specific availability. 

Data centers always guarantee a specific amount of uptime. Therefore, we express data center uptime in terms of these four tiers.

Tier 1: Nonredundant power, cooling, and network connectivity

Tier 2: At least some redundancy for power and cooling

Tier 3: Able to withstand a 72-hour power outage

Tier 4: Able to withstand a 96-hour power outage

Data centers commonly express their efficiency through a score, which we often refer to as power usage effectiveness (PUE). It reveals how data centers use power. Data centers with good PUE consume less power than others and charge less. They are also more friendly to the environment. 

Also, as discussed earlier, how the data center was constructed is critical. Many places in the world are susceptible to natural disasters. So, it is necessary to double-check if the data center’s construction is strong enough to survive a natural disaster. For example, data centers in hurricane-prone areas should be able to withstand the 150 mph winds. 


Good physical security is also essential to colocation providers. Colocation providers put in their best efforts to provide the best physical security. Some providers erect fences in data centers to isolate the tenant’s hardware. All fences have locking gates. Tenants can access their data center hardware after passing through many security checkpoints. However, some providers do not allow physical access. Instead, they offer hardware maintenance and installation through remote hands. 

All vendors have their pricing models. For example, some bill their tenants based on the rack space they use, and some lease the space by the square foot. However, the pricing model is not all in all regarding price. Some other important factors are bandwidth usage, power consumption, geographic location, technical support incidents, and support contracts.

Colocation Vs Public Cloud

People often confuse public cloud providers with server colocation data centers, while they are both different. Yes, they both allow businesses to run their workloads in a remote data center, but their offers are different. Colocation centers offer you the physical data center space while you provide your own hardware. It mainly includes storage, supporting infrastructure, and servers. 

Cloud providers use their own hardware. The client’s workloads would run on the cloud provider’s hardware, which resides in the cloud data center. Provider charges for storage, network, compute, and all other resources that the client’s workloads consume. 

Organizations prefer anyone based on their priorities. Those who do not want to purchase and maintain hardware and want consumption-based pricing go for the public cloud. Those who want to run their workloads on their own hardware in remote data centers prefer colocation services.


Colocation also allows you to expand your IT infrastructure when you need more. For example, businesses may need room for growth in different functionalities like space, power, security, or support. An ideal provider would work with you to determine your needs and make modifications. 

Storage Options

Colocation data centers offer two different types of storage to their customers. You should select the option that goes with your company’s size, budget, and security preferences. 

Colocation Cabinet

The colocation cabinet protects the physical infrastructure from unauthorized access. Two to four tenants can easily use one cabinet. You can rent them as half, partial, or complete. However, when one tenant rents partial space, the host will separate that tenant’s equipment from others. Therefore, two tenants of the same cabinet cannot access each other’s equipment. 

Cage Colocation

Providers would add a cage around the customer’s data center rack in this storage type. The cage serves as an additional layer of security and helps meet the particular needs of the deployment. This option is suitable for businesses that need a higher level of security or must adhere to specific requirements.