What is colocation (colo)? Features + How it helps your business

‍Colo is what enterprises use when they want to house their own servers inside a third-party data center. A provider manages power, cooling, security, and connectivity. The enterprise keeps direct control of its hardware.

Meter Connect helps fold colocation into broader network plans so businesses can balance cloud, on-prem, and remote sites without extra complexity.

What is colocation?

Colocation, or colo, is when a business rents space in a data center but owns the hardware inside it. The provider delivers the physical space, power, cooling, and security. The business keeps ownership of the hardware and full control over how it runs.

Enterprises use colocation to get the reliability of a data center without having to build one themselves.

Key features of colocation services

Enterprise-grade reliability

Colo facilities include redundant power feeds, backup generators, advanced cooling, and fire suppression. These systems keep critical workloads running when local utilities fail.

Carrier-neutral connectivity

A colocation network usually supports multiple carriers inside the same facility. Enterprises can connect to different ISPs or private lines, which lowers costs and gives flexibility if one provider goes down.

Physical security

Colo security includes controlled entry, 24/7 surveillance, and staffed checkpoints. Enterprises know their servers sit in a facility with tighter safeguards than most office buildings can provide.

Scalable footprint

Colocation services let businesses start with a single rack and expand to cages or suites. Growth does not require a new data center build, which makes scaling predictable and easier to budget.

Service level agreements

Providers back uptime, power availability, and environmental standards with written SLAs. These agreements give enterprises confidence that the infrastructure supporting their hardware will stay consistent.

How does colocation work?

Colocation works by splitting responsibilities between the enterprise and the data center provider. Enterprises own the hardware, and providers manage the facility. The process follows a clear sequence that starts with space and ends with ongoing operations.

Lease the space

An enterprise contracts for rack units, cages, or suites inside a colocation data center. The agreement specifies available power, cooling, and bandwidth.

Ship and install hardware

The enterprise delivers servers, storage, and networking gear to the facility. On-site staff provide secure access for setup.

Connect to the network

Equipment links into the colocation network through cross-connects or carrier options inside the facility. Enterprises often extend this link into their enterprise network backbone for private, low-latency performance.

Operate and maintain

The provider manages building infrastructure, while the enterprise manages its own servers. Remote monitoring tools and “remote hands” support allow IT teams to handle maintenance without constant site visits.

Providers also deliver layers of colo security, including controlled access and surveillance, so enterprise hardware stays protected.

Colo networking integrates with cloud or VPN connections. A latency-sensitive application, for example, can run inside colo for stability while its front-end lives in the public cloud.

Redundant systems for power and cooling are common, and enterprises can review data center redundancy standards to understand what level of protection a provider offers.

Colocation vs. cloud: What’s the difference?

The difference between colocation and cloud is who owns and manages the hardware, as illustrated in this table:

A colocation network gives enterprises control and compliance at the cost of flexibility. Cloud services trade control for speed and simplicity. Many enterprises now use both models together as part of a hybrid IT strategy.

Pros and cons of colocation

Colocation services give enterprises a mix of advantages and trade-offs. The value of colocation depends on how much control and flexibility the enterprise needs.

Pros:

• Direct control over enterprise-owned hardware.
• Data center reliability without building one yourself.
• Colo security features that meet compliance standards.

Cons:

• Upfront cost for servers and equipment.
• Less flexibility compared to public cloud.
• Ongoing monthly fees for space, power, and bandwidth.

What industries use colocation the most?

Industries with strict rules, sensitive data, or heavy performance needs use colocation the most. These sectors demand control that the cloud alone can’t provide.

Finance

Banks and trading firms use colocation to process transactions quickly and reliably. Colo security and backup systems keep services running, even when power or internet connections fail. Regulations also push financial institutions to keep their hardware under direct control.

Healthcare

Hospitals and clinics turn to colocation to protect patient data. Healthcare laws demand strong safeguards, and colo facilities provide them. Organizations can keep their own servers while relying on the data center for physical security and reliable uptime.

Government

Government agencies use colocation when cloud services don’t meet their security needs. Colo networks give them a way to run sensitive applications in a controlled environment. Facilities that meet federal or regional standards make compliance easier.

Technology

Tech companies often need low-latency performance for apps, platforms, or online games. Colocation gives them stable connectivity and predictable performance. By owning the hardware, they get control without the cost of running their own data center.

Is colocation right for your enterprise?

Colocation is right for an enterprise that wants control of its hardware without building a private data center. It supports workloads that stay steady over time. It also works for companies that need strict compliance or reliable uptime.

Some enterprises pair colocation with network isolation to keep sensitive data secure.

Colocation is not right for enterprises that want fast scaling or pay-as-you-go pricing. Those needs fit better with cloud services.

Colo also creates problems with a limited IT staff. Running servers in a third-party facility still takes planning and care. Some enterprises solve this by combining colocation with hardware as a service, which shifts equipment setup and maintenance to the provider.

Best practices for choosing a colo provider

Enterprises should weigh more than cost when they pick a colocation partner. The right provider keeps workloads safe, steady, and connected.

Check security and SLAs

A colo provider must protect your servers with strong security and clear uptime guarantees. Ask about physical safeguards, monitoring, and written service level agreements. Colo security standards vary, so confirm they meet your needs before signing.

Review power and redundancy

Enterprises should review how a provider handles power loss, cooling issues, or building failures. Facilities that include backup systems for power and cooling reduce the risk of outages.

Confirm carrier options

Enterprises need choice when they connect to outside networks. A good provider offers multiple carriers and cross-connects. Flexible carrier access helps reduce cost and avoid outages.

Consider managed options

Some enterprises want control but don’t have the staff to manage it all. Providers that offer managed network as a service take on tasks like monitoring and lifecycle support. Colo becomes easier to run when the provider handles those responsibilities.

What colocation looks like when it’s managed for you

Colocation becomes more powerful when it pairs with managed services. Enterprises keep control of their hardware while handing off the heavy lifting of day-to-day operations.

A managed provider handles tasks like monitoring, troubleshooting, and lifecycle support. Colo networking then feels less like a burden and more like an extension of the enterprise backbone.

Enterprises that choose this model gain a stable infrastructure without tying up IT staff on routine work. The result is predictable performance with less complexity.

Where Meter Connect fits into the colocation model

Colocation solves the hardware side, but enterprises still need networks that reach every site and cloud service. Meter Connect extends colo into a broader enterprise framework.

We handle procurement, provisioning, and lifecycle management for wired connectivity. Our accountability removes the burden of chasing carriers or juggling multiple contracts.

Colo networking also benefits from direct integration. Meter Connect builds secure backbones that link colo sites, offices, and cloud providers. The result is predictable performance across the entire enterprise footprint.

With Meter Connect, enterprises get colocation that fits into a larger strategy instead of a one-off project. The model scales as your business grows, without leaving IT staff buried in operational work.

Get enterprise colo networking without the complexity

Running colocation on your own often turns into a maze of carriers, contracts, and ongoing support tickets. Each deployment brings its own obstacles, and without a single point of accountability, projects drag and performance suffers.

Meter Connect brings order to that process.

We take ownership of connectivity around your colo environment, from procurement to installation to lifecycle support. Every site stays aligned with enterprise goals and on schedule.

One partner. One plan. No dead ends.

With Meter Connect, you don’t just rent rack space. You get:

• One contract, all major ISPs: Get fiber, coax, and wireless, all under one roof. We’ll match you to the best option and manage installation end-to-end.
• Real, local expertise: We track performance across the whole city so that you don’t have to guess what’s actually fast or reliable on your block.
• White-glove support: From pricing through post-installation, our team works alongside yours. No more waiting on hold with a dozen carriers.
• Flexible, future-ready solutions: Whether you’re scaling across offices or adding remote work backup, we help you build a resilient connectivity stack.

Plus, for enterprises that need more than wired connectivity, Meter offers a full-stack enterprise networking solution. It delivers Wi-Fi, switching, and security with the same focus on accountability and performance, giving you a complete foundation for growth.

Stop asking what colo is and start making it work!

Request a quote from us today on Meter Connect.

Frequently asked questions

What does colocation mean?

Colocation means placing your own servers inside a third-party data center. You keep control of the hardware, while the provider handles power, cooling, and physical security.

How is colocation different from a traditional data center?

Colocation is different from a traditional data center because you own the hardware, and the provider runs the facility.

What’s the benefit of colocation over cloud?

The benefit of colocation over cloud is control. You manage your own servers while still using secure power and cooling.

How does colocation support multi-site networks?

Colocation supports multi-site networks by giving you a central hub to connect branches, data centers, and the cloud.

Can I use colo without in-house IT?

You can use colo without in-house IT if your provider offers managed colocation services.

What is a colo network connection?

A colo network connection links your hardware in the facility to the internet or private networks.

How does Meter support colocation networking?

Meter supports colocation networking by pairing colo with enterprise backbone design and lifecycle support.

What’s the difference between colo and managed hosting?

The difference between colo and managed hosting is ownership. Colo means you own the hardware, and hosting means the provider does.