20 Questions About Colocation

We answer your colocation questions. Get an introduction to colocation that addresses
all of the introductory questions you are likely to have.

What is colocation, and how does it relate to data centers?

Colocation involves outsourcing your data center environment to a provider that manages the surrounding support systems for your IT equipment. Rather than paying to build your own facility, you host your hardware in a colocation provider͛’s professional one. This provides access to better scaling, increased bandwidth, lower latency, enhanced security, and a number of specialized services. You avoid large capital outlays to build a data center and more often than not, the colocation provider͛’s data center is going to have certain features that an individual business would forgo due to the expense.


What is the difference between a colocation facility and the cloud?

Let’s start with how colocation and cloud computing are similar. While clouds come in different flavors, the cloud is always accessed from a data center via the Internet. Many cloud providers are housed in data centers they don’t own – they are outsourced to a colocation provider. Some businesses build their own private cloud on their own hardware in a colocation facility. Some public cloud providers may operate their own data center, but all reliable providers have common elements – power back-up systems, robust environmental systems and redundant Internet access. The term cloud essentially refers to using advanced virtualization techniques that allow for faster provisioning of services, higher uptimes, and more efficient use of IT resources including software, storage and security. If you are considering whether you should be a colocation user or a cloud user, you have many choices including:
  • Use colocation to build your own private cloud. A colocation facility can provide the basic requirements you need for high availability. You could use multiple colocation facilities if your business requires geographic diversity. If you want to control your hardware choices and features, your virtualization platform, and your operating environment, this might be the right choice for you. Leverage the colocation provider͛s facility and their access to network services.
  • Consider an IAAS engagement for your own private cloud. IAAS stands for Infrastructure As A Service which is a form of cloud computing. The IAAS provider is responsible for the server, network and storage hardware. Depending upon the engagement, you may also purchase the virtualization platform licensing from the provider as well. You avoid any capital expense for the data center or for the IT hardware. You may have a choice in the type of hardware and/or virtualization tools used. You may also have access to the virtualization tools to manage yourself, or the provider may take that responsibility as well.
  • Use a public cloud provider. There are public cloud providers who will provide you with access to their cloud platform in increments as small as an hour. You essentially pay for the time you use their assets which can include processing time, various types of software, storage and network access. In most cases, you use whatever hardware the provider uses with little or no choice. And in many cases, you may be using shared resources with other customers of all shapes, types and sizes.
We work with customers who are both using our colocation services to create their own private cloud, and others who rely on us to build and manage a cloud environment for them.

Is colocation a better option than the cloud?

Colocation and the cloud are not mutually exclusive.

Some of the main decision factors we see with customers are the amount of investment and control that a business wants to exercise over its hardware and infrastructure, how comfortable the IT staff is with cloud computing, and how well suited the business is for a cloud environment.

Some businesses that are using the cloud as a colocation user are very particular about the hardware platforms that they use, and have IT staffs that are well versed in server virtualization, network storage, and cloud environments. They want total control over the hardware being used since they have an affinity to certain hardware vendors, or are comfortable with the feature set the vendor provides.

Other businesses may be more comfortable running hardware servers instead of a cloud solution for many reasons: perhaps the applications being used are not easily migrated. While these colocation users are more traditional in their approach, they can always introduce a cloud solution for a portion of their environment.

Businesses who are looking solely at cloud providers may be trying to avoid upfront hardware costs by simply “paying as they go” through monthly fees, and are comfortable relinquishing the hardware and operating system choices to the provider.


What do you need to know in order to get started with colocation?

Generally speaking, you need to know what your business requires in its hosting plan. 

  • What are your hardware requirements?
  • What are your power requirements?
  • What does your budget look like?
  • Where do you want to colocate?
  • How is your business likely to grow and change in the future?
  • What are your network requirements and how will you handle public facing IPs?

Once you’ve answered these questions, you next need to determine which colocation host best fits your needs. While doing so, consider the following:

  • How are power and cooling handled?
  • What is the facility’s Service-Level Agreement? How will they address unscheduled downtime?
  • How scalable are they? How scalable do they need to be?
  • How reliable are they?
  • How fast can they get your infrastructure up and running?
  • Do they have an established presence on the market?
  • What type of connectivity do you need? Do you have any pre-existing carrier relationships that you want to maintain such as a private network or MPLS?
  • What type of security measures do they take to keep the facility protected?

Is the cloud replacing the colocation industry?

The short answer is no. Although cloud services have taken business from colocation providers, there is nothing to indicate that the colocation industry is dying out. What many people forget is that cloud services and platforms require physical infrastructure to serve as their backbone: even as more businesses move to the cloud, there will still need to be physical servers, and the most efficient place to house them is almost always a colocation facility.

That said, the colocation industry does need to change if providers don’t wish to begin suffering significant losses. As noted by Data Center Knowledge’s Keao Caindec, providers need to start offering easy direct connect, online ordering, commitment-free contracts, and better customer service – all things offered, incidentally, at Liberty Center One.


How much support staff is there in a colocation facility, and how does this compare to cloud computing, dedicated hosting, VPS, etc?

Although the numbers may vary depending on how many clients a particular facility serves, the general answer is ‘as few as possible.’ Consider, for example, Facebook’s recent Rutherford data center – according to a press release from the company, a 300,000 square foot data center creates 35 permanent jobs – that includes sysadmins, network engineers, storage engineers, and security staff. Colocation facilities can be said to have a similar employment density to dedicated hosts and private data centers.


Why is it better for most companies to put their server in a colocation facility than to build their own data center?

The answer is simple: cost. A colocation facility is significantly more cost-effective (and less logistically intensive) than building a private data center. By colocating, you’re paying exclusively for your hardware – and a bit of additional support. A private data center, meanwhile, carries with it expenses such as power, construction, bandwidth, transportation of supplies, and employee payrolls. Your IT staff may be experts in managing servers and storage but it takes different skill sets to manage air conditioners, power systems and generators. All of these functions are taken care of by the colocation provider.

Additionally, by colocating, you gain access to a selection of specialized services that aren’t available if you run your own facility: managed security, for example, and 24/7 technical support.

Colocation also provides economies of scale. A high availability data center has either two of everything or at least one spare for every system. Two of everything equals double the cost. Take for instance, Internet access. To be fully redundant, a company building its own data center would want to contract with two independent network providers for their Internet access. If they only needed one 100 mb/s circuit, they have to purchase two. The colocation provider has relationships with many ISPs and can typically provide redundant Internet access for less the cost of a single circuit due to their purchasing power.


How do colocation facilities charge for rackspace and power, and how does Liberty Center One compare with the rest of the industry?

Colocation providers charge based on the footprint of your rack for space, and by the circuit for power. Although many colocation providers do offer a baseline feed of power with each cabinet or rack, it’s rarely enough for day-to-day operations – especially with denser deployments. Often, this is done to limit rack density.

Liberty Center One’s costs are competitive for an enterprise-focused, high availability facility. We tailor each rack’s power delivery to each customer’s hardware deployment, and provide a wide selection of different circuits depending on our clients’ requirements. Our environment is designed to support power densities beyond 15 kW per rack and our advanced power bus system can easily light up power circuits in minutes, not days.


At what point does it make sense to start physically colocating servers as opposed to other options?

Cost-effectiveness and productivity are the biggest consideration here. If, for example, your business requires that your employees and your customers be able to access your data resources 100% of the time, then keeping your servers in the corner IT closet without redundant backup power and redundant ISP resources puts your business at risk.

Some businesses that are hosting their computing resources on their own premises are using computer rooms that are not equipped to handle the increased power and cooling load of newer hardware. Outsourcing to a colocation provider avoids the costly upgrade of cooling systems and utility services.


What are some ways to reduce server power consumption?

There are a few measures you can take:

  • Ensure your servers are being used efficiently. Consolidate and virtualize as much as you can.
  • Use cloud bursting for high-traffic/high-resource periods rather than additional infrastructure.
  • Implement an automated load-balancing solution, such as Amazon EC2.
  • Use energy-efficient equipment; avoid servers and server components known for high energy usage.

How often do you need to physically visit your data center?

Cost-effectiveness and productivity are the biggest consideration here. If, for example, your business requires that your employees and your customers be able to access your data resources 100% of the time, then keeping your servers in the corner IT closet without redundant backup power and redundant ISP resources puts your business at risk.

Some businesses that are hosting their computing resources on their own premises are using computer rooms that are not equipped to handle the increased power and cooling load of newer hardware. Outsourcing to a colocation provider avoids the costly upgrade of cooling systems and utility services.


How does 95th percentile billing work, and what costs can you expect to pay for bandwidth?

When calculating bandwidth costs, a carrier will sample a client’s bandwidth usage roughly every five minutes. This allows us to determine a base data rate for each client, generally calculated in Mbps. With the 95th percentile rule, we discard the highest 5% of our samples for both inbound and outbound traffic.

Billable usage is then determined based on the highest remaining usage. This lets us give our clients the capacity to undergo brief bursts in traffic without being charged extra, while at the same time allowing us to manage overages in a cost-effective fashion. In short, it’s a plan that’s fair for both host and client.

When providing a burstable service, customers are typically put on either 100 mb/s ports or 1 Gb/s ports which allows traffic to burst at those rates when needed. With burstable billing at the 95th percentile however, a customer could burst to their maximum port size (let’s say 1 Gb/s) for up to 36 hours for a typical month and those hours would fall into the top 5% of the samples taken and would therefore be eliminated from the usage calculation. The next highest value becomes the billable rate.


What does a bandwidth provider do, and how are they different from a hosting provider or colocation facility?

A bandwidth provider is exactly what it sounds like. It provides the cabling infrastructure that connects different points of presence, and transports data between facilities. While a hosting provider or colocation facility might provide bandwidth to clients, neither is strictly specialized to provide exclusively bandwidth.

The best analogy for this would be to think of colocation facilities as factories or warehouses, and bandwidth providers as transporters; their business is connectivity rather than computing resources.


What is the difference between a hosting company and a colocation facility?

The difference is actually quite simple: a hosting company sells services, whereas a colocation facility sells server space that might be used to host those services. There’s a bit of overlap, of course, as some colocation providers also offer hosting services separate from server space.


When does it make sense to scale up (upgrade your servers) and when does it make sense to scale out (add more servers)?

While scaling up makes sense for small increases in resource requirements, it’s generally not a better solution than scaling out. This is because scaling up tends to incur far greater short-term costs, and does very little to reduce the risk of hardware failure – and outages as a result of said failure. There’s also a limit to how much you can scale up, as you can only upgrade your hardware so much before there’s nothing left to add.

Scaling out, on the other hand, allows you to scale infinitely. Generally speaking, you’ll always be able to add new servers to your infrastructure, and though it may lead to higher utility costs in the long-term, the short-term costs will be much easier for your business to manage. Scaling out also allows for greater redundancy.


How concerned should you be about the intake temperature (the temperature of the colocation facility and your server rack) and how might it affect your servers?

Provided the facility in which you’re colocating has appropriate HVAC/airflow, not at all. Most colocation providers handle cooling/climate control for the clients. They tend to keep data centers operating within the range of 72-78 degrees Fahrenheit (though Google’s suggested that the optimal temperature could actually be as high as 80 degrees).


Is it a viable business model to host a server (or servers) in a colocation facility and sell off server resources as a web host?

Yes – and in fact, many web hosts actually do just that. Colocation costs less than managing your own data center, and in the long-term, it’s much more cost-effective than operating off of dedicated servers or VPS hosting. Bandwidth costs are also much lower when colocating – a factor that’s extremely important for web hosts. And in case you’re worried about violating some contract, don’t be; when you host your hardware in a colocation facility, it’s yours to use as you see fit.


How does security compare for colocation compared with cloud services?

Strictly speaking, from a client perspective it doesn’t. Cloud computing, since it’s entirely digital, necessitates a greater focus on protecting data in-transit, controlling access, and providing a means of secure connectivity. At the same time, these are all security considerations that are likely to come up if you colocate, as well – especially if your business employs remote workers or outsources its labor.

In addition, while colocation requires servers to be physically secured, this is almost always handled by the host – the client very rarely has to participate in protecting their physical servers.


Will Open-IX replace the current carrier-peering model of the internet?

While Open-IX is likely to cause disruptions for lower-tier ISPs, it’s highly unlikely that it will replace high-tier interconnections wholesale. Major carriers have a well-established, concrete presence in the hosting space, and the majority of internet exchanges in the United States are still privately-owned. This means that Tier 1 carriers operate a network far superior to anything Open-IX is capable of offering.

That said, Open-IX offers an alternative for businesses that don’t necessarily have access to the ‘walled gardens’ of Tier 1 carriers. It allows organizations such as content and entertainment providers to reach companies outside of Equinix’s exchanges without paying through the nose for it, for example. In other words, Open-IX shouldn’t be considered a replacement for carrier-peering; rather, it should be thought of as an alternative peering model.


What are you responsible for if you choose to colocate, as opposed to other forms of hosting?

When you colocate, you’re outsourcing a data center – and you have all the responsibilities that entails. You’re in charge of managing your server’s hardware, including maintenance, installation, upgrades, in-rack power distribution and usage, and access authorization. Compare this to running your own data center where you are also responsible for the physical security, the building management, UPS and generator maintenance, equipment repairs, HVAC operation, and network access.