Colocation is the sharing of IT (information technology) servers with other like-businesses, the act of inserting your own server into a provider’s rack, or the act of transmitting and receiving data streamed over the Internet, using servers that can be shared or dedicated. A colocation service provider has everything that a business would require to fulfill all of their IT needs. Each server that the colocation service provider has must have a physical backup that can replace it in the server rack if anything happens to it. When colocation is used, data is managed, backed up and stored in at least two different places, one of which is off-site for safety reasons. Power generators and backup systems are provided for when power failures happen, so that businesses that use their services do not lose customers during trying times.


From streaming data to ensuring secure encryption services for credit card transactions, point of sale (POS) transactions and online check out services, using a colocation service provides everything that a company would need to take their business to the next level. Bandwidth (the amount of data that can be transferred from and to a server each second, recorded in Mega Bits per second of data, or Mbps) is usually charged at rates of about $150 per Mbps per month. This reflects major savings to the customers using colocation services as the provider is responsible for the employees that run and maintain the servers, the physical servers and their backups, as well as all of the data and power backup systems and disaster recovery requirements.

Essentially, colocation gives the customer full access to what they would need to run a small to very large business that relies upon data transmission over the Internet without their own Internet infrastructure. However, smaller businesses may be better off using cloud computing, at least until they have constantly drawn an extensive online presence or have exceeded projected consumer demand, considering the extreme differences in costs between the two.

Benefits of using colocation;

  • Cost savings from not having to hire a data technician, system administrator and a programmer (or, for a busier company or those requiring 24/7 customer support and systems administration, 3 to 5 of each position) plus the initial costs of the servers and bandwidth assignments.
  • Web hosting is normally included in colocation fees.
  • Security and reliability of bandwidth access.
  • Double-redundant power and data backup systems.
  • Disaster backup and recovery.
  • Sharing bandwidth with companies that are much like your own, therefore sharing certain infrastructure costs over a wide variety of infrastructure requirements, like sharing servers and bandwidth space.
  • The more Mbps used, the lower the fee per Mbps.
  • Unlimited static addresses.

Related costs, on average, for colocation services;

  • $30 and up per month for one server, or from $1,000 per month and more for one full rack of dedicated and connected servers. The more prolific and reliable colocation service providers will charge a higher fee due to the more expensive equipment that they supply.
  • $150 and more per month for each Megabyte per second (Mbps) of bandwidth required or used.
  • $750 to over $10,000 for one single server of average manufacture.
  • $75 to $150 per hour for a data technician, on an as-required state.
  • Double the cost or more per hour for night or after-hours coverage.

The average office running their own servers would incur costs of about $5,000 to $10,000 per month for just one employee to be onsite 24/7 for customer support, for just one shift five days a week. Over a week there would be five employees required for each staff position to run a multi-server system, and this quickly becomes cost-inhibitive for small to medium businesses. Having access to a dedicated 24/7 technical service staff as part of the colocation fees alone more than makes up for the cost of the colocation service. With just the costs of updating and replacing the physical servers over time, the idea of businesses like medium to large offices, stores with an online presence and IT start-ups running their own servers is almost unimaginable.

Using a colocation service would readily permit heavy web traffic with secure credit card or bank transactions for POS businesses, with server traffic constantly monitored for security and possible threats and with IT professionals on hand to ensure a constant Internet presence. When customers are looking for something online and they get “404 Error: Page not found,” they go to another website and do their business there. Having a business’s Internet access hosted by a colocation service provider gives them peace of mind that their online presence and security are constantly ensured, and that their business will not be affected by server or power problems. And of course the major savings in related costs makes using colocation one of the more popular ways to provide a constant online presence at minimal costs.


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Categories : Technology, IT Services
Tags : Colocation

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Author : Bobbi Preston

I am a software engineer work as a freelancer specialized in web and software. My interests involves programming, website development and writing articles related to Computer Science/Information Systems.

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