A colocation centre or colocation center (also spelled co-location, colo, or coloc), is a type of data centre where equipment space and bandwidth are available for rental to retail customers. Colocation facilities provide space, power, cooling, and physical security for the server, storage, and networking equipment of other firms—and connect them to a variety of telecommunications and network service providers—with a minimum of cost and complexity.

Benefits

Colocation has become a popular option for companies with midsize IT needs—especially those in Internet related business—because it allows the company to focus its IT staff on the actual work being done, instead of the logistical support needs which underlie the work. Significant benefits of scale (large power and mechanical systems) result in large colocation facilities, typically 4500 to 9500 square metres (roughly 50,000 to 100,000 square feet).

Colocation facilities provide, as a retail rental business, usually on a term contract:

• lockable rack cabinets or cages,
• power in a variety of formats, AC and DC,
• network connectivity—either in a ‘house blend’, where the colo provider is a customer of carriers, and connects their clients to their own router for access to multiple carriers, or as direct ‘cross-connect’ access to the routers of the carriers themselves, or both,
• cooling,
• physical security (including video surveillance, biometric and badge access, logging, and the like), and
• real-time live monitoring of all these functions for failures.

They also provide redundant systems for, usually, all of these features, to mitigate the problems when each inevitably fails.

Among the economies of scale which result from grouping many small-to-midsized customers together in one facility are included:

• higher reliability due to redundant systems
• full time monitoring by live humans
• lower network latency and higher bandwidth at a lower cost
• specialist staff, like network and facilities engineers, which would not be cost effective for any single client to keep on the payroll.

Major types of colocation customers are:

• Web commerce companies, who use the facilities for a safe environment and cost-effective, redundant connections to the Internet
• Major enterprises, who use the facility for disaster avoidance, offsite data backup and business continuity
• Telecommunication companies, who use the facilities to exchange traffic with other telecommunications companies and access to potential clients—a colo facility where many carriers are physically present is often called a ‘carrier hotel’; the presence of such a facility at a colo increases its value to some classes of potential customers.