A colocation centre (collocation center) ("colo" or carrier hotel is a type of data center where multiple customers locate network, server and storage gear and interconnect to a variety of telecommunications and other network service provider(s) with a minimum of cost and complexity.
Increasingly, organizations are recognizing the benefits of colocating their mission-critical equipment within a data centre. Colocation is becoming popular because of the time and cost savings a company can realize as result of using shared data centre infrastructure. Significant benefits of scale (large power and mechanical systems) result in large colocation facilities, typically 4500 to 9500 square metres (roughly 50000 to 100000 square feet). With IT and communications facilities in safe, secure hands, telecommunications, internet, ASP and content providers, as well as enterprises, enjoy less latency and the freedom to focus on their core business.
Additionally, customers reduce their traffic back-haul costs and free up their internal networks for other uses. Moreover, by outsourcing network traffic to a colocation service provider with greater bandwidth capacity, web site access speeds should improve considerably.