What is Colocation?

Colocation (also known as ‘co-location’ or ‘colo’) is the practice of housing privately-owned servers and networking equipment in a third party data centre. Instead of keeping servers in-house, in offices or at a private data centre, companies can choose to ‘co-locate’ their equipment by renting space in a colocation centre. Therefore, unlike other kinds of hosting, where customers can rent space on a server owned by a hosting provider, with colocation the customer already owns the server and rents the required physical space to house it within a data centre.
A colocation provider will rent out space in a data centre in which customers can install their equipment, but will also provide the power, bandwidth, IP address and cooling systems that the customer will require in order to successfully deploy their server. Space is rented out in terms of ‘racks’ and ‘cabinets’. A rack is a standardised frame for mounting equipment and hardware, usually horizontally. Equipment that is to be mounted in a rack is measured in rack units (U), where one rack unit is 1.75 inches. The price for a colocation plan is then calculated from the number of units required. A full size rack is 47U and is often called a ‘cabinet’. Depending on their budget and requirements a customer can rent full, half or partial cabinets. 
Colocation allows customers to benefit from economies of scale that would not be available to them with an in-house option. Housing hardware in a colocation centre gives access to higher levels of bandwidth than would be achievable in a normal office server room, and at a much lower cost. Consequently, network latency can be far lower with colocation, whilst reliability can be significantly higher. There is greater protection from power outages, with numerous back-ups in place, and most good colocation providers will have staff on hand 24/7 to deal with any problems, should they arise. 
Customers may also choose colocation services because of the higher levels of physical security that are available in comparison with in-house hosting. For example, options such as CCTV monitoring and lockable (or ‘closed’) cabinets, which may be more difficult to implement in an in-house system, are used in colocation data centres in addition to other measures such as fire detection and suppression systems, mantraps and private suites.
Flexibility is a key element of colocation. Choosing a bespoke build allows customers to personalise their colocation plan and decide which aspects of their system they want to focus on. Having a range of different facilities on offer can also be highly useful to customers, allowing them to choose the infrastructure that best suits them and their budget. A Tier 1 colocation centre is similar to a server room and may be more appropriate for smaller businesses while a Tier 4 centre has much higher levels of uptime and redundancy and is more suitable for large corporations with mission critical systems.     
Colocation allows users to take advantage of data centre infrastructure while maintaining control over the upkeep, maintenance and configuration of their servers. It can be cost effective and can free up valuable space in offices. Colocation also saves resources that would otherwise be spent dealing with the logistics of keeping servers in-house.