Colocation simply means a provision of space for customer’s telecommunications or computer equipment at the service provider’s premises with minimum cost and complexity. It is also called as carrier hotel. Companies can buy rack space and store their own server equipment in data centre which are custom build for this purpose. In colocation services multiple customers can run their servers from a single location but using servers of their own. Colocation has its own inherent benefits and flaws.

The benefits of having a colocation are that sharing data centre infrastructure gives the client’s time and cost savings. This frees the internal bandwidth of companies for their core business activities. A custom build location for colocating provides facilities like cooling towers, round the clock security cover, customised rack spaces, uninterrupted power backup etc. They also provide internal connectivity among servers for easy n quick transfer of information among the servers. The external connections are provided by fibre optic cables and wireless satellite connectivity ensuring uninterrupted connectivity.

As in a field of business colocation also carries its own disadvantages. In case of colocation services the companies will have to buy their own dedicated servers and located it in the data centres and pay rent for the rack space and monthly charges for the bandwidth used. Thus the clients pay for what they own.

In addition to the rack rent and monthly bandwidth charges the companies will also have to take care of the maintenance of the server. Thus if the maintenance is not outsourced the experts from the clients will have to physically visit the data centre to carry out the maintenance. In case of colocation the monthly charges are based on the bandwidth used. Thus the monthly costs keep varying by huge amounts.

The need for colocation depends on individual clients needs. The ability of the clients to afford and maintain will give them an advantage by colocating.