Carrier Neutral Connectivity at Colocation Data Centers

By: John Shepler

Companies feeling starved for bandwidth may not realize that they’re doing it the hard way. Instead of making the carriers come to you, there are advantages in you going to where the carriers are.

It’s All Happening at the Colo
The places where carriers flock are called colocation or colo centers and carrier hotels. These are large data centers that are meant to serve a variety of tenants. Contrast that with the typical data center that serves only a single company. In fact, most companies want nothing to do with renting out space in their data centers. The security issues alone make them blanch.

Why Do Colocation Centers Exist?
It has to do with economy of scale. Say you have 100 companies and each one needs a data center. They may well construct their own in-house data centers sized to meet their needs. This involves creating a dedicated space that is environmentally controlled, secure, with fire protection and backup power. Uninterruptible power supplies based on batteries and inverters cover short term power glitches. Anything over a few minutes depends on diesel or gas generators outside.

Data Center Costs
As you might expect, there is considerable cost involved in building and running a data center. Aside from the initial capital investment, there are constant operating costs involving air conditioning, electric power and support personnel. These costs persist regardless of business level and the equipment may sit idle for two-thirds of the day. Smaller companies often can’t justify the expense of round-the-clock tech support.

Connectivity Counts
What level of bandwidth you can get and how much it will cost are largely a function of where you are located. If your offices are in a smaller town or rural area, you may have only a single provider to pick from and severe bandwidth limits.

Economy of Scale
Now, what if those same 100 companies decided it would make more sense if they all moved into a single much larger data center that would serve all of their needs. You might think the overall total cost would be similar, but actually they would be much lower.

It’s the economy of scale that saves. Each company only needs racks and cages large enough to house its servers and other equipment. A few larger backup generators can supply emergency power when needed instead of 100 smaller generators on standby. A common security force can handle access control and monitor intrusion sensors. A common tech support group can handle the occasional needs of all companies 24/7.

From Owner to Renter
The tenant companies switch from an ownership to a rental model. They don’t need to overbuild, because they can always rent more or less facilities as needed. The colo operator takes the responsibility of building the facility, providing utilities, security and tech support.

A Magnet for Carriers
Have you ever had a carrier tell you that it’s just too expensive to bring fiber optic service to your company? They might do it, but you’ll be responsible for the construction costs and they can be eye-popping. The colo center, howler, acts like a carrier magnet. They see 100 potential customers for their service and make their fiber available. Most colo centers are near populous areas, making the construction relatively easy.

Will you have a carrier to provide you bandwidth service at the colo? Most likely, you’ll have at least several and perhaps a lot more. Each carrier has its own colo space with racks and cages. It costs them little more to bring in high bandwidth service for 100 companies than a single customer. That, plus the competition of having multiple carriers bidding for your business, makes pricing more attractive than it might be to your own facility.

Meet Me for Service
Colos have an ingenious setup called the “meet me” room or MMR. This is an area dedicated to making cross-connections. The colo operator runs copper or fiber cabling to your racks from the MMR. They also run copper or fiber from the carriers to the MMR. When you contract for bandwidth, the colo patches you to the carrier and you’re all set. If you change your mind, you can work out the next contract with a different carrier and the colo will simply move your patch cord.

One additional advantage of using an MMR is that there is no “local loop” charge because the colo is providing the “last mile” or, in actuality, “last foot” connection.

Two Types of Colos
You should know that there are a couple different types of colos. One is operated by a single carrier. They build the facility for their own needs and then rent out extra space. You can get really high bandwidth and reasonable prices in such a facility, but you may have only one or a few carriers to pick from.

The second type of colo is operated by a third party who is in the colocation business and doesn’t favor any customer or carrier. These are often called carrier neutral facilities because you aren’t required to connect to any particular bandwidth provider.

Clouds and Colos
Cloud services are often located in colocation facilities. This gives the cloud provider a facility to support their extensive servers and storage. If you are collocated within the same facility, then it’s a simple wire or fiber connection to hook you up with one or more cloud service providers.

Are your data center costs higher than you would like or are you having trouble getting the WAN bandwidth you need to support your business? This would be a good time to investigate what’s available from a number of colocation centers and cloud service providers.

Why Colo Bandwidth Pricing Is Lowest

Want to see something that will make you jealous? Get a pricing quote for colocation bandwidth.

Sickening, isn’t it? Or is it? Sure, the cost per Mbps at the colo center is much less than you are paying to bring in the same bandwidth to your server racks. Even if you can get a serious cost reduction on your line services by using a telecom broker like Telarus, you’ll still pay less when you co-locate. Is that fair?

Sure it is. The cost reduction you find at colocation facilities comes from a couple of sources. First, there are likely to be a lot more carriers serving that facility than your building. They flock there because they know that they’ll find lots of bandwidth hungry customers all in one spot. These carriers can hear the cash registers going ka-ching! all the while they are bringing in their fiber optic lines. Of course, that ka-ching! sound is ringing in every carrier’s ear. Pretty soon they are battling to get the most customers with the highest bandwidth requirements. That drives prices down and encourages even more customers to move into the “carrier hotel,” as colos are often called.

Beyond fierce competition from multiple service providers, bandwidth costs are low because connection costs are trivial. You know the last mile connection? Yes, the line from your facility to the carrier’s closest point of presence? If you are using copper or SONET fiber, chances are that the last mile is being leased from the incumbent local telephone company. They put the cables in the ground and they expect to get paid for their use, especially if they are being used by a competitive carrier. Inside the colocation center there is no last mile. You have a hard time running a mile of cable even if you wrapped it around the building a few dozen times. That last mile is reduced to the last 100 feet, and it is often installed by colo center personnel. They simply run a drop, fiber or copper, from the carrier “meet me room” to your rack. Plug it in and you are connected.

Lots of competition and easy connections are the reasons behind those mouth watering colocation bandwidth prices. The question becomes, “how can you get in on the action?”

The obvious answer is to move to the colo facility. But what about the costs of space and utilities? They’re probably lower than what you pay now, especially if you are renting. Economy of scale keeps the cost of electricity, HVAC, security, fire suppression, and backup power at reasonable rates. You can even outsource the installation and maintenance of your equipment to the colocation center technical staff. They’re always on duty anyway. Is your staff?

Before you brush off the idea of packing up and moving your high bandwidth server equipment to a colo center, run the numbers. Compare costs of facilities and bandwidth and see which makes more sense. It can be a real eye-opener... and cost saver.