April 20, 2015

A Place of Your Own: “Wholesale Colocation” Defined


Imagine if someone had offered you the following proposition back in your early 20s: swap your roommate-filled studio apartment for a luxury custom home and save on monthly rent. Too good to be true, right? We believe that for large footprint data center users, wholesale colocation currently offers an analogous value proposition. Yet, many are unaware of its existence or misunderstand its offering.

While widely used, the term “wholesale colocation” has escaped precise definition. Our definition is best stated by initially defining what it is not:

  1. Not principally a provider to resellers.
    The term “wholesale” is a misnomer in this regard. While wholesale colocation providers can sell large spaces to resellers and/or retail colocation providers for subdivision into small cages or individual cabinets, they also routinely contract directly with end users. We, in fact, only contract with end users.
  2. Not a provider of shell space.
    While some real-estate oriented players do provide “powered shell” products, wholesale colocation is predominantly a turn-key solution. At minimum, the demarcation point of our solution is the output breaker of the PDU wherein our tenants supply racks and contract independently (with us or third parties) for power circuits and low voltage cable plant. Quite often, we provision completely “rack ready” solutions including fully coordinated racks, power whips and cable plant.
  3. Not necessarily a do-it-yourself model.
    While certain wholesale models take a “your space, you figure it out” approach, others provide very high level of integration and coordination services. In fact, the reduced quantity of customers in a wholesale facility versus a retail facility arguably makes it easier to attain high service levels. We provide a full suite of a-la-carte services, commencing at initial project coordination and continuing through to daily operations. We do not directly provide application or network-level services, however enable a rich set of third-party managed service providers to provide services on site as needed.
  4. Not more capital-intensive.
    Our solutions can be entirely structured as rental payments or flexibly structured to blend capex and lease payments based entirely on tenant preferences.

Simplistically, wholesale colocation as a category is defined by scale and autonomy. In contrast to retail colocation which provides individual racks/small cages in a fairly rigid shared environment, wholesale colocation provides large dedicated solutions that can flexibly accommodate custom operational, change management and reporting requirements.

At its best, wholesale colocation enables large-footprint users to leverage the best practices and economic benefits of a mega-scale facility without sacrificing the security or autonomy of a dedicated asset. It blends demised and dedicated computer rooms with custom office areas, scalable infrastructure, best-in-class facility operations and complete vendor neutrality. It provides a “data center within a data center” feel at a higher quality and a better value than traditional do-it-yourself or retail alternatives.


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