Retail Colocation vs. Wholesale Colocation: What’s the Difference?

3 Apr 2020 by Michael Kriech

What qualifies colocation as either retail or wholesale? It depends on who you are talking to. Various colocation providers and data center professionals have different thresholds to determine which type of colocation a client falls into. In this article, we will discuss the service options provided and the different thresholds that help to determine a retail colocation versus a wholesale colocation client as well as the costing structure.

What is colocation?

First of all, what is colocation? Colocation, also referred to as collocation, co-location or collocated, is a data center facility that has been sub-leased by multiple tenants for IT infrastructure. This infrastructure may be comprised of physical or virtual servers, storage devices, network routers and switches, and other equipment and hardware.

Colocation providers often lease their colocation space within a data center to businesses, large enterprise clients, government agencies and other service providers. In return, the customers receive a turnkey hosting solution that typically includes raised floor space, power circuits, internet, and network connectivity, physical security, and critical systems monitoring. This all-inclusive service allows the customer to host their mission-critical IT infrastructure offsite in one or more data center locations. When you look at colocation service offerings, you will notice that it really comes down to three elements, space, power and connectivity or space, power and ping.

What is retail colocation?

Retail colocation is geared towards businesses, start-ups, and government agencies.

Space

Retail colocation space is usually defined by a provider as anything under 10 colocation racks or cabinets. This space typically includes one or more colocation racks located side-by-side or dispersed throughout a data center and connected together with cross connects instead of being in a private cage. Retail colocation can include per unit colocation space in increments of 1U, 2U, 3U, 4U as well as locking colocation quarter racks, half racks, and full racks. It can also include multiple locking racks.

Power 

Power, or usable power requirements, is another measure or threshold for retail colocation. Colocation providers will reference rack power densities, power circuits, and usable power as a measure for pricing services and classifying them as retail or wholesale. Providers have different power thresholds to classify retail colocation based on geographic location or the data center facility itself. In my experience, retail colocation services include total power densities less than 100 kilowatts (kW). Again, this varies greatly by colocation provider. Retail colocation could be up to 100kW, 200kW, 500kW or 1MW.

Connectivity/Ping

When it comes to colocation, internet services and network connectivity or ping play a smaller role in determining whether or not to classify the service as retail or wholesale. With retail colocation, many providers include blended internet access or offer options in relation to the telecom carrier or ISP the client prefers.

Cost Structure

Retail colocation providers offer bundled services at a flat rate based on the power circuit or kW included with the service. such as a full colocation rack with 208V/20A power and 100 Mbps blended internet connection for a set monthly price. On top of the bundled service cost there is an installation cost also known as non-recurring charges (NRC). Most colocation providers, both retail and wholesale) include the cost of the buildout into the initial deposit and monthly recurring charges (MRC). This includes infrastructure buildout costs associated with delivery of additional power, cooling and connectivity such as fiber builds. It also includes rack containments, facility access, security and installation of critical data center infrastructure such as UPS systems and backup generators. The cost is usually lower for retail installation because of the space and complexity requirements and the racks may already be set up.

What is wholesale colocation?

Wholesale colocation is geared towards large enterprises, service providers and government agencies.

Space

A wholesale colocation client will require more space so they may receive a locking private cage, private suite or even a build to suit option in which expansion or new data center facility is constructed or built out for their needs. The purpose of wholesale colocation space being separate from other clients is to ensure the security of IT infrastructure in a multi-tenant data center facility.

Power

Wholesale colocation pricing is dependent on the power costs associated with the colocation space. As stated above, most wholesale colocation clients require 500 kW or more for total power, but this number may fluctuate. Most colocation providers start by defining the client’s total usable power requirements. For example, a client may require 500 kW to power their IT infrastructure in their offsite colocation environment. The provider will first calculate the rack power density for each colocation rack to determine the amount of space required. If the client requests 500 kW of power and each rack has a power density of 10 kW per rack, the colocation provider will offer 50 colocation racks.

Connectivity/Ping

Wholesale colocation typically includes only space and power. Internet and network connectivity can be offered by the colocation provider or telecom carrier and ISP of the client’s choosing. The internet and connectivity requirements for wholesale colocation may include special requirements and buildouts such as cross connects, dark fiber and roof rights. The bandwidth requirements and diversity of on-net carriers can play a critical role in selecting a wholesale colocation provider.

Cost

Pricing options for wholesale colocation differs from the bundled services cost model used by retail colocation. Wholesale colocation providers can provide pricing options such as per kW, MW, or kVA as well as offering metered or sub-metered power pricing. Metered power allows for more flexibility in pricing when power requirements are variable. Most colocation providers that offer metered colocation require a minimal commitment and then charge for usage above the commitment level on a per kWh cost. The installation cost is also higher for wholesale because of the requirements and design of the space.

Which is right for you - retail or wholesale colocation?

Which is better for your current IT infrastructure requirements – retail or wholesale colocation? The answer really depends on the client and colocation provider. As a good rule of thumb, retail colocation is anything under 10 colocation cabinets. Wholesale colocation is anything over 10 cabinets and power requirements over 100 kW. Again, this is highly dependent on the colocation provider, geographic location, and data center facility.

Can you save money with wholesale colocation over retail colocation? Yes. However, there’s a larger commitment in terms of the NRC, MRC, and length of the contract. Despite colocation prices being lower, the wholesale colocation provider must be able to realize the profit over time.

Contact me to learn more about your options for colocation and whether retail or wholesale colocation is a better fit for your IT infrastructure requirements. We’re partnered with all of the top colocation providers and can provide you with different pricing options based on your goals and objectives.

Author

Michael Kriech

Michael brings twenty-three plus years of IT and telecommunications experience to Datacenters.com. With a wide range of expertise, Michael assists his clients in determining the best solutions needed for their technology roadmap. As information technology infrastructure evolves, Michael continues to suggest and present comprehensive, stable, and scalable solutions. This helps clients take advantage of the best and latest technologies that support company objectives while freeing up time to concentrate on core competencies. With a passion for helping organizations meet their goals, Michael is willing to go the extra mile to support his clients. A Navy Veteran and proud husband and father, Michael and his wife (Jessica) spend their spare time raising puppies as a volunteer for Canine Companion for Independence (CCI).

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