Colocation 101: Services, Pricing, and More

Server colocation, a growing trend, offers a cost-effective alternative to constructing and managing full-scale data centers. It involves leasing secure space, power, cooling, and network services from a dedicated provider, allowing businesses to deploy their own IT infrastructure.

This article will provide an in-depth look at the key colocation pricing and service models. We’ll also compare and contrast colocation to alternatives like public cloud services and wholesale data center leasing. Understanding the full range of colocation offerings and costs allows for matching this flexible data center solution to your infrastructure needs.

What is Colocation?

Colocation refers to placing company-owned IT hardware, like servers, switches and storage devices, in rented space at a third-party data center facility. Instead of owning the entire building, colo tenants effectively “co-locate” their technology alongside other businesses in a shared environment.

Tenants supply their own equipment and connect it to the facility’s network infrastructure. The colocation provider owns and maintains the data center building, backup power, cooling systems, and network access. Customers pay for the space, power, cooling, and interconnection services used each month.

Server colocation data centers provide access to an enterprise-class environment without the high capital and operational costs of building and staffing an entire facility. They deliver essential benefits like rock-solid uptime, physical security, network connectivity, and technical support staff.

Colocation Services Explained

Colocation facilities offer a range of services that enable customers to rent ready-made data center capacity tailored to their needs:

• Cabinets/Cages: The colocation provider offers secured spaces for tenants to install racks and IT equipment. Options range from single cabinet spots to larger caged-off areas with multiple racks.
• Power: Tenants receive stable, conditioned and redundant power supply to their spaces. Generators and UPS systems provide backup power during outages. Power is metered and billed based on usage.
• Cooling: Precision HVAC and CRAC systems regulate temperatures within tight parameters and pump cooled air into equipment areas.
• Physical Security: Robust controls protect the facility, including guards, access cards or biometric scans, video surveillance and secure perimeters.
• Network Access: A variety of telecom carriers and connectivity options are available to link colocated infrastructure to users and other sites. Cross connects establish direct networking between tenants in the same facility.
• Remote Hands: Skilled on-site technicians are available to perform routine hands-on tasks as needed, serving as remote hands for colocated customers.

These services allow colocation users to leverage expert data center management while focusing their in-house resources on core servers and applications rather than facilities.

Colocation Services Defined

Other key terms you should know when learning the meaning of colocation services include:

• Power density: The amount of power supplied per rack or footprint, measured in kW/rack or kW/sq ft. Higher densities support more powered IT equipment.
• Redundancy: Having critical facility infrastructure, like power and cooling, designed with multiple independent systems to avoid single points of failure.
• Uptime: The percentage of time a data center maintains operational connectivity measured over a year. Uptime demonstrates overall reliability.
• Latency: The delay for data to transit networks. Minimal latency provides fast response times.
• Carrier neutral: Offering access to multiple network providers rather than just a single carrier. Provides tenant options.
• Cross connect: A private connection established between tenants within the same facility for direct routing.

Colocation Pricing Models

Colocation utilizes flexible, usage-based pricing models that allow organizations to pay only for the exact data center resources utilized each month. Key pricing components generally include:

Space Rental Fees

Tenants are charged a recurring lease fee for each rack cabinet or caged-off space occupied by their gear. Higher-density power configurations for dense hardware deployments will incur higher rental rates. Space rental costs are fixed based on the amount of colocation footprint.

Metered Power Usage

Electricity consumed by tenant equipment is metered and billed at a per kilowatt-hour rate. Power-hungry server configurations with high redundancy will pay substantially more than low-density setups. Power usage charges align billing with actual variable costs.

Network Interconnection

Connecting into facility telecom carriers and establishing cross-connects between colocated spaces incur monthly bandwidth and port fees. Tenants only pay for the interconnection bandwidth utilized.

Additional Server Colocation Services

Extra services like remote hands tech assistance, new power cabling, and equipment installation/removal are billed on an as-needed basis. Additional services represent variable operating expenses dependent on usage.

Evaluating Colocation Pricing

It’s important to consider network connectivity needs, server power densities and uptime requirements when selecting colocation space. Higher redundancy colocation spaces (also known as colo spaces) come at a premium cost. Weigh the benefits of fixed monthly pricing for cost predictability against variable usage-based plans with lower minimums but unpredictable fluctuations.

Carefully calculate the total cost of occupancy, including all projected colocation fees. Finding the ideal balance of space, power and services for budget ratios is crucial for selecting the best server colocation facility.

Wholesale vs. Retail Colocation

Colocation comes in two varieties: wholesale and retail. Retail colocation — the most common type — involves renting a small portion of space like a cabinet or cage. Wholesale colocation means leasing an entire data hall or a significant chunk of contiguous space from the provider.

Wholesale colocation requires greater upfront commitment and investment to build out the space but grants tenants more control and customization. Retail colo space offers shorter lease terms and flexible growth in smaller pre-built increments but less autonomy. Retail colocation meets the needs of most small and midsize companies. Hyperscale cloud and enterprise users gravitate toward wholesale colocation suites.

Comparing Colocation to Cloud

Public cloud and colocation services offer two very different models for hosting IT infrastructure, so it’s important to explore the pros and cons of each approach.

Physical Access

One major difference is that colocation provides physical access to leased data center space for installing servers, switches and storage hardware. Public clouds like AWS, Azure and Google Cloud consist of entirely virtualized, remotely accessible resources.

Colocation tenants can directly touch and modify their infrastructure as needed within their rented cabinet or cage. Public cloud users rely on remote management using cloud portals and APIs to configure standardized virtual machine instances.

For organizations that prefer hands-on contact with hardware or need to accommodate legacy bare metal servers, colocation offers a distinct advantage. A cloud’s remote server abstractions can present a learning curve for some.

Control and Customization

In a colocation facility, the tenants control the hardware specifications and networking within their compartmentalized space. Cloud environments allow much less customization since users are constrained to choose from standardized instance types and template configurations.

Colocation enables creating of an environment tailored to specific requirements. Dedicated racks in a colocation space are not shared with others. Public cloud resources are, by nature, shared among multiple subscribers.

For those with specialized infrastructure needs outside public cloud offerings, colocation grants greater control and exclusivity. A cloud’s templated approach can limit flexibility.

Deployment Speed

A key benefit of public cloud services is the nearly instantaneous deployment of new capacity. Launching cloud-based servers takes only minutes without procuring any hardware. Colocating physical gear inherently adds delays in installing and configuring equipment.

For use cases where rapid provisioning is paramount, public cloud services have a clear speed advantage. Colocation forces a more methodical, planned deployment pace, given the physical plant considerations.

Consumption-Based Pricing

Public cloud pioneered a utility-style pricing model based on actual consumption rather than fixed leasing. Customers only pay for the specific resources used each billing cycle. Colocation requires longer-term commitments for leased space along with monthly fees.

For workloads that experience significant variability or short lifecycles, pure public cloud pricing aligns costs closely with usage. Colocation cases with stable, predictable infrastructure have more pricing predictability.

Considerations for Choosing Colocation

Choosing the optimal colocation provider involves carefully evaluating a range of factors that impact performance, reliability, scalability, security and costs for your critical IT infrastructure.

Network Connectivity

Assessing network connectivity options should be a top priority. The colocation facility needs to offer ample network capacity and low-latency access to your other sites and end users. Evaluate carrier availability, fiber redundancy and bandwidth scalability. Proximity to your offices, cloud services or application users is vital to ensure a high-quality interconnection.

Uptime and Redundancy

The colocation data center must deliver rock-solid reliability based on power, network, and cooling redundancies. Review the provider’s historical uptime metrics and tour the facility to inspect redundancies firsthand. Independent audits like Uptime Institute Tier certifications validate site infrastructure redundancy.

Don’t trust your operations to anything less than a true fault-tolerant colocation facility with layered redundancy and 99.999% uptime.

Scalability and Growth

Determine if the provider can easily accommodate adding more colocation capacity as your needs evolve. Having room to grow within the same facility avoids costly relocations. Seek flexible terms that allow scaling up power, cooling, and space without penalties. Growth options enable right-sizing deployments over time.

Security and Compliance

Physical and network security protections are paramount for colocation facilities. Multi-factor access control, 24/7 monitoring and logging, video surveillance and secured equipment cages demonstrate rigorous controls. Ensure colo providers comply with any regulatory or data standards, like HIPAA and PCI, that apply to your organization.

Costs and Contracts

Obviously, the monthly recurring colocation pricing factors heavily into provider selection. Compare rates for the space, power, cooling, and network access tiers needed. Weigh longer-term contracts for greater cost stability against shorter commitments for added flexibility. Clarify any hidden fees and confirm pricing aligns with your budget.

Customer Service

Don’t underestimate the value of top-notch customer service when evaluating server colocation vendors. The responsiveness and technical competence of remote and on-site support teams indicate how well the provider will address inevitable issues. Visit their NOC and interact with technicians to experience service quality firsthand.

Carefully grading colocation providers on these criteria will help identify the ideal partner tailored to your organization’s needs and future infrastructure strategy.

Flexible, Scalable Colocation Data Center Services

Colocation delivers flexible, scalable data center capacity without the headaches of building and operating your own facility. A colocation provider handles the space, power, cooling and security while tenants focus on their critical servers and applications. Understanding the range of colocation services and pricing models allows for matching this solution to your organization’s IT requirements and constraints.

Evaluating top providers based on proximity, reliability, security, costs and capabilities will lead to a colocation partnership positioned for long-term success.

Contact LOGIX Fiber Networks today to request a tour of colocation data center services.

FAQs

What is colocation in a data center?

Colocation refers to renting space for servers, networking equipment and storage hardware within a data center facility operated by a third-party provider. Tenants supply their own IT gear into a rented cabinet/cage colocation space. The colocation provider manages the surrounding data center infrastructure.

What are the different types of colocation services?

The main colocation services include leased cabinet/cage space, power delivery, cooling, physical security, network connectivity options, and remote hands technical support. Colocation allows renting essential data center services without owning the facility.

What is the difference between colocation and wholesale data center?

Retail colocation involves leasing a small portion of space, like a cabinet or cage. Wholesale colocation means renting an entire suite or hall and building it out. Wholesale requires more upfront investment but offers full customization. Retail colocation provides faster deployment with less control.

What is the difference between private cloud and colocation?

A private cloud is a dedicated environment for virtualized computing resources accessed remotely. Colocation provides physical data center space for installing owned hardware like servers and switches. Private cloud offers shared hardware abstractions, while colocation grants dedicated physical resources.

What is colocation also known as?

Colocation is also referred to as colo, a data center facility, data center leasing, data center hosting, carrier hotel, connectivity hub or interconnection site. All these terms refer to renting data center space rather than owning the facility.

What are the benefits of colocation vs. cloud?

Colocation provides physical access, control, and customization of owned hardware. Cloud enables faster deployment of virtual resources accessed remotely. Colocation offers predictable pricing, while the cloud is entirely usage-based. The ideal scenario often involves a hybrid of colocation and cloud.

Contact LOGIX Fiber Networks today to request a tour of our colocation data center facilities.