Today’s businesses face several challenges when it comes to managing their IT infrastructure, from escalating costs and security concerns to the need for reliable uptime and more. Colocation data centers offer a solution to these challenges by providing a secure, cost-effective, and scalable environment for businesses to house their servers and IT equipment.
Whether you’re considering a move to colocation or simply want to understand this important IT strategy better, this guide will give you the information you need to make informed decisions about your data center needs.
Colocation Data Center – Definition
A colocation data center, often referred to as a “colo,” is a facility that provides space for businesses to house their servers and other computing hardware. Instead of maintaining an in-house data center, companies place their equipment in a third-party facility that provides the necessary space, power, cooling, and security to keep the hardware running smoothly. While the data center manages the infrastructure, businesses retain full control over their equipment.
How Does Colocation Work: From Rack To Network
Colocation data centers operate on a shared infrastructure model, which allows businesses to leverage enterprise-grade facilities without the investment required to build and maintain their own data centers.
Businesses place their servers and other hardware in racks or cabinets provided by the facility.
The colocation provider ensures uninterrupted power, robust cooling systems, and high-speed internet connections, creating an environment optimized for uptime and performance.
Clients remotely manage their equipment but benefit from the facility’s enhanced security measures and 24/7 monitoring.
Types Of Colocation Data Centers
Colocation data centers offer various service levels to meet the diverse needs of businesses. The main types of data centers in a colocation facility are:
Retail Colocation
Ideal for small to medium-sized businesses, retail colocation allows companies to lease individual racks or cabinets.
Wholesale Colocation
Larger enterprises with extensive IT needs can lease entire rooms or cages, providing more significant space and control over their environment.
Hybrid Colocation
This option combines colocation with cloud services to offer businesses the flexibility to manage workloads between on-premises, colo, and cloud environments.
Colocation Data Center Requirements
The key components and services involved in a colocation data center include:
Space Leasing
Businesses lease space in the data center, which can range from a rack or cabinet to a dedicated cage or room. This flexible approach allows companies to start small and expand their footprint as their IT requirements grow.
Power Supply
Colocation facilities offer redundant power solutions to ensure continuous uptime for your equipment. These centers typically have multiple power feeds, uninterruptible power supplies (UPS), and backup generators to protect against outages.
Cooling Systems
Advanced cooling systems, such as hot/cold aisle containment and precision air conditioning units, maintain optimal temperatures to prevent overheating and extend the lifespan of your hardware. Some data centers also implement eco-friendly cooling solutions to reduce energy consumption and environmental impact.
Security & Compliance
Data centers leverage multiple layers of security, including biometric access controls, surveillance cameras, and on-site personnel. Many colocation providers also ensure compliance with industry-specific security standards, such as HIPAA or PCI DSS.
Network Connectivity
Colocation facilities typically offer a choice of multiple internet service providers and the option to set up direct connections to major cloud providers. This connectivity ecosystem allows businesses to create low-latency network architectures tailored to their specific needs.
Carrier Neutrality: Real Choice, Better Routes
A carrier-neutral facility lets you choose from multiple providers, optimize routes, and negotiate better terms. You’re not locked into a single network.
Cross-Connects & Cloud On-Ramps
Private cross-connects deliver low-latency, predictable performance to ISPs, partners, and clouds. Direct on-ramps to major providers help avoid public-internet bottlenecks and reduce data-egress surprises.
Interconnection Fabrics & Ecosystems
When peers, partners, and platforms share the same campus, you can plug into an existing ecosystem. That cuts latency, lowers cost, and makes new integrations as simple as ordering another cross-connect.
Managed Colocation & Remote Hands
Managed Colocation: What You Get
Managed Colocation extends standard rack and power with hands-on help from certified technicians. You keep control of your gear. We take care of the tasks that pull your team away from higher-value work.
Remote Hands: 24/7 On-Site Support
From power cycling and swap-outs to cabling, racking, and media handling, Remote Hands covers the jobs you shouldn’t have to drive across town to do. It’s available around the clock and tied to clear response targets.
Change Management You Can Trust
Moves, adds, and changes are tracked through tickets with time stamps and photos where applicable. You see exactly what happened and when.
When Managed Colocation Makes Sense
If you’re short on staff, operate multiple sites, or need predictable SLAs for physical work, Managed Colocation reduces risk and speeds resolution without sacrificing control.
Benefits Of Colocation Data Centers
Colocation data centers offer several advantages for businesses looking to optimize their IT infrastructure, including:
Cost Efficiency
Opting for colocation can be more cost-effective than building and maintaining an in-house data center. By using a colocation facility, you can avoid the substantial capital expenditures associated with developing your own infrastructure. You’ll also save on ongoing operational costs like power, cooling, and security management.
Seamless Scalability
Data center colocation solutions offer unparalleled scalability, allowing your business to expand its IT infrastructure as needed. Unlike an in-house data center, which may be constrained by physical space or power limitations, colocation facilities can accommodate your growth quickly and efficiently.
High Uptime
Colocation data centers are designed with multiple redundancies in power and connectivity to ensure maximum uptime. This level of reliability is often difficult and expensive to achieve with an in-house solution, making colocation an attractive option for businesses that require constant availability of their IT systems.
Enhanced Security
Colocation facilities invest heavily in both physical and cyber security measures, offering a level of protection that many businesses would struggle to implement on their own. Your data and equipment benefit from comprehensive security protocols, such as advanced access controls and 24/7 monitoring.
Focus On Core Business
By outsourcing data center management to experts, your IT teams can focus on completing strategic initiatives rather than the day-to-day complexities of infrastructure management.
Sustainability & Energy Efficiency
Energy Efficiency In Practice
Hot/cold aisle containment, precision cooling, and liquid-ready designs keep hardware within spec while using less power. Efficient facilities help extend hardware life and control operating costs.
Renewable Energy & Transparent Reporting
Ask about renewable energy options and how usage is tracked. Clear reporting lets you measure progress against internal ESG goals without guesswork.
High-Density, Lower Footprint
As workloads grow, AI, analytics, HPC, power density climbs. Facilities engineered for higher kW per cabinet can consolidate footprints, reduce overhead, and delay costly expansions.
Key Challenges In Colocation Data Centers
Data Sovereignty
One of the primary challenges with colocation is ensuring that data storage complies with local laws and regulations. Different countries have varying requirements for data protection and residency, which can complicate where and how data is stored.
Businesses operating in regulated industries, such as healthcare and finance, must ensure their colocation provider adheres to these legal frameworks to avoid penalties and maintain trust.
Choosing Netlink Voice, a provider with expertise in regional compliance, is critical to overcoming this challenge.
Latency Issues
The physical distance between a colocation facility and a business’s primary operations can significantly impact performance.
Latency, or the delay in data transmission, becomes a concern when facilities are located far from end-users or critical systems. This can hinder real-time applications such as video conferencing, financial trading, or IoT-based services.
To address this, businesses should carefully select colocation providers with facilities located near key operational hubs or use edge colocation solutions to minimize latency.
Vendor Lock-In
Vendor lock-in is a concern when businesses rely heavily on a single colocation provider’s proprietary technologies or services. Switching providers can become costly and complex, limiting a company’s flexibility as its needs evolve.
To mitigate this risk, businesses should prioritize colocation providers like Netlink Voice that offer open standards, flexible service agreements, and easy data migration options.
Colocation Pricing: Models & Cost Drivers
Common Pricing Models
Most providers bill by cabinet or square foot with metered power. You’ll also see kW-based commits for predictable loads. Choose the model that matches your growth plan.
Typical Cost Drivers
Power draw, bandwidth, and cross-connects make up the core. Remote Hands, smart PDUs, and special access requirements can add up. Geography and tier level influence the base rate.
Contract Terms That Affect Price
Longer terms often mean better rates. Watch for re-rating on power, minimum cross-connect terms, and early-termination language. A clean exit clause protects you as needs change.
Colocation vs Cloud: What Is The Difference?
Colocation and cloud computing serve different IT infrastructure needs.
Colocation gives businesses control over physical servers in a professional-grade facility, offering consistent performance and customizable setups. In contrast, cloud computing relies on virtual servers hosted and managed entirely by a third-party provider, offering flexibility and on-demand scalability.
While colocation suits organizations needing strict control and predictable costs, the cloud is ideal for those prioritizing agility and cost-effectiveness. Many companies find value in combining both in a hybrid approach.
Common Use Cases For Colocation Services
Businesses across various industries leverage colocation data centers for different purposes. Here are some common use cases:
Disaster Recovery
Colocation facilities provide an ideal solution for disaster recovery, ensuring data redundancy and business continuity in case of an on-site failure.
Regulatory Compliance
Many industries, including finance and healthcare, have strict data storage regulations. Colocation data centers often comply with these standards, which helps businesses meet legal requirements.
Hybrid IT Environments
Companies looking to balance their on-premises infrastructure with cloud solutions can use colocation as a hybrid IT strategy.
High-Density Computing
Organizations with high-density computing needs, such as those in AI and big data analytics, benefit from the power and cooling capabilities of colocation centers.
How To Choose A Colocation Provider
Selecting the right colocation provider is critical for ensuring your business reaps the full benefits of this IT strategy. Consider these key factors when evaluating potential data center partners:
Location
Choose a data center location that balances proximity to your operations with disaster recovery needs. A well-placed facility can reduce latency and improve accessibility while also providing geographic redundancy.
Reliability
Look for a provider with a strong track record of uptime and reliability backed by robust Service Level Agreements (SLAs). This ensures your critical systems remain operational and accessible when you need them most.
Security Measures
Ensure the facility has comprehensive security protocols, including physical security measures, cybersecurity defenses, and compliance with relevant industry standards. This protects your valuable data and hardware from various threats.
Scalability Options
Evaluate the provider’s ability to support your growth and adapt to changing IT requirements. A flexible colocation partner can accommodate your needs as your business expands and evolves.
Support Services
Assess the level of support offered, including remote hand services, technical assistance, and customer service responsiveness. Reliable support ensures you can quickly address any issues that arise with your colocated equipment.
Uptime, SLAs & Data Center Tiers
Understanding The SLA
An SLA should spell out uptime targets, response times, and escalation paths. Look for clarity on maintenance windows, credits, and how incidents are communicated.
Data Center Tiers at a Glance
Tiers indicate resiliency. Higher tiers add redundancy and fault tolerance so planned work or a single failure doesn’t take you down. Match tier to business impact, not to a logo.
What Uptime Really Means For You
Five nines looks great on paper. What matters is how it’s achieved: redundant power paths, diverse carriers, tested generators, and disciplined change control. Ask for evidence, not just claims.
Colocation Data Center FAQs
What is colocation, and when is it better than cloud?
It’s the practice of placing your own servers and storage in a third-party data center engineered for power, cooling, security, and connectivity. You keep control of hardware and configs; the facility provides the environment.
When it’s better than cloud: steady, predictable workloads; strict compliance or data residency; custom hardware (HPC/AI, GPUs); high egress costs; and when you want consistent performance with known costs. When cloud wins: bursty demand, rapid spin-ups, managed PaaS/SaaS. Most teams land on a hybrid approach, use Data Center Colocation for core, stable systems and cloud for elasticity.
How does colocation work for my existing on-prem gear and networks?
You lease the right-sized footprint (cabinet, cage, or suite), order the power circuits you need, and connect to carriers or private cloud on-ramps. We coordinate delivery, racking, and turn-up. You remote in as usual; on-site Remote Hands handles physical tasks.
A typical path:
Plan power, cooling, and cross-connects → Stage gear and cabling → Migrate during a maintenance window → Validate network, storage, and failover → Operate with monitoring, ticketing, and access controls. That’s how colocation works in practice – control stays with you; the facility handles the environment.
What’s included in managed colocation vs standard data center colocation?
Standard colocation gives you space, power, cooling, security, and carrier-neutral connectivity. You manage hardware, OS, and apps.
Managed Colocation adds people and process: 24/7 Remote Hands (power cycles, swaps, cabling), IMACs (installs/moves/adds/changes), structured change tickets with time stamps/photos, inventory checks, and optional monitoring/alerting. You still own the stack and decisions; we handle the on-site work to speed resolution and reduce truck rolls.
How to choose a colocation provider: which SLAs, tiers, and interconnects matter most?
Start with SLAs that spell out uptime, response, and escalation—plus maintenance windows and credit language. Tie them to your RTO/RPO.
Match data center tiers to business impact: higher tiers add redundancy and fault tolerance so planned work or single failures don’t cause downtime.
Confirm interconnection: carrier neutrality, diverse paths, cross-connect availability, and direct cloud on-ramps. Then check location/latency, security certifications (e.g., SOC 2, ISO 27001, PCI DSS, HIPAA as needed), and the depth of Remote Hands coverage. Finally, review contract terms for clean exit and scalable power commits.
What drives colocation pricing (power, cross-connects, Remote Hands), and how can I control costs?
Core drivers are space (cabinet/sq-ft), power (kW commits and usage), bandwidth, cross-connects, and Remote Hands. Geography, tier level, and contract length also influence rates.
To control costs: right-size power commits, consolidate with higher-density cabinets, bundle cross-connects, use private on-ramps to limit egress, choose longer terms for better pricing, and audit actual utilization quarterly. Keep your footprint and power aligned with real demand, not guesses.
Netlink Voice: Your Expert Colocation Data Center Partner
Colocation data centers are transforming how businesses manage their IT infrastructure. By moving your servers and hardware to a colocation facility, companies can position themselves to meet the ever-evolving demands of the digital age while maintaining focus on their core competencies and growth strategies.
At Netlink Voice, we offer secure, scalable colocation services that grow with your business. Our Tier 1 facilities feature redundant power and connectivity, advanced security measures, and 24/7/365 monitoring through our dedicated Network Operations Center – and our national backbone means we’re ready to meet your data center colocation needs anywhere in the United States.
Ready to elevate your business’s IT infrastructure with a reliable colocation partner? Contact our experts today to get started!