What is Colocation?

July 29 2022, by Krish Ruban | Category: Data Centres
Colocation data centres

Does your business need to expand their IT infrastructure, but lack the physical or technological capacity to do so? Colocation data services assist in hosting and storing IT hardware, data, and access to network connectivity in optimum conditions for efficient business operations.

Colocation, colloquially referred to as ‘Colo’, involves hosting business IT infrastructure and data in an off-premises data centre. You can rent out physical space in the form of racks to hold your own servers and harddrives that are maintained and operated by the data centre. These colocation facilities tend to have extensive power and cooling configurations to ensure the optimal conditions for stability. Multi-tenant data centres are a modern solution to the lack of infrastructure and how synonymous data has become with business operations.

The recent trends have been creating a new normal in the digital landscape. The huge surge in e-commerce driven businesses, customer-centric applications and in particular, SaaS such as cloud systems for remote workflows has given rise to an abundance of data. While the average consumer is now more aware of network bandwidth and the myriad of unified collaboration (UC) tools on offer, the real importance lies in the data infrastructure that supports them. Macquarie Data Centres specialise in housing and safeguarding data, providing ample space, energy, bandwidth, cooling services, certifications and security for all of our client’s needs and preferences.

Colocation is perfect for businesses who are focused on scalability, or outgrowing their own in-house IT server room. It’s particularly ideal for international companies who want to streamline their expansion processes or overseas operations. For example, if you’re a business based in the United States with a large Australian-consumer base you may find that hosting your data infrastructure a little closer to its users makes things faster and easier. Macquarie Data Centres has a long standing heritage in telco and is trusted by over 42% of Australia’s Federal Government agencies. Why not connect your business to Australia through the best in the business?

  • How Colocation Works
  • Colocation Features
  • Benefits of Colocation
  • Data Centre Tiers
  • Colocation Pricing

How Colocation Works?

Generally speaking, businesses only need to provide their colocation hosts with their own servers and IT equipment and the colocation provider gives the business access to their facilities which include all the necessary physical space, power, cooling, bandwidth and security to support their digital operations.

The purpose of colocation is to provide businesses with the freedom to manage their own infrastructure without the risks and hassles associated with managing the facility itself. Hosts provide clients with space allocations in their own data centres in the form of rack space that is specially designed to hold an array of different IT infrastructure. They equip these space allocations with optimised power and cooling configurations, as well as ample backups to ensure continuous operations even in the case of unexpected events. Furthermore, colocation facilities are designed to be highly secure and private, ensuring that your business integrity is not compromised. At Macquarie Data Centres, we’re pedantic about maintaining the integrity of your data and IT operations. We have industry leading security standards, from gates and man traps outside the facility to access restrictions such as biometrics scanners and swipe card records for all of our cages.

Unlike many other providers, Macquarie Data Centres offer 24x7x365 around the clock security and dedicated support from a team of over 200+ engineers cleared to government standards to ensure the highest level of protection and troubleshooting for your business data. Moreover, our industry certified facilities and sophisticated reporting capabilities are scalable, as well as adaptable to your needs, because at Macquarie Data Centres, we’re committed to forging long term lasting relationships with our clients.

Colocation Features.


Accessibility is undoubtedly integral when it comes to hosting your IT infrastructure and sensitive business data. Most importantly, you do not want the location to compromise on connectivity speeds and stability, as well as general convenience.

Moreover, the location of the colocation facility also plays a huge role in maintaining the reliability and security of business data, as even minute periods of outage can potentially result in millions of dollars in losses for a large-scale e-commerce business or cloud service provider. As such, data centres in areas more prone to natural disaster or potential terrorist attacks could have significant and costly ramifications for the business.

At Macquarie Data Centres, the customer has always been at the core of our business model, that’s why our facilities are conveniently placed in accessible locations within the two most important business areas in Australia. Our two world-class data centre campuses in Sydney’s Macquarie Park and Canberra have become the data-hosting cornerstone for multinational corporations and the federal government.

Purpose-built for hyperscale, global multinationals, and government operations, our five data centres are unrivalled in the Australian market:

  • IC1: Located in Sydney’s Central Business District.
  • IC2: Located in our Macquarie Park Data Centre Campus, 15 minutes north of Sydney’s Central Business District.
  • IC3 East: Located right next to IC2, IC3 is our second facility in the Macquarie Park Campus. IC3 SuperWest is our latest project that will round off our Macquarie Park Data Centre Campus.
  • IC4: Located in Canberra, the capital of the nation, for the Federal Government.
  • IC5: Located within the existing Macquarie Data Centre Canberra Campus.

Carrier-Neutral Connectivity.

Carrier-Neutral Connectivity allows for connectivity between multiple colocation providers. This means connectivity is possible for different service providers, being telecommunications, ISP, or others, without the usual barriers. Carrier-neutral facilities foster a broad ecosystem of network connectivity, peering and cloud onramps meaning that your business will not be restricted in your pursuit of growth.

Macquarie Data Centres offer the possibility of Carrier-Neutral Connectivity, providing flexible and diverse opportunities for a range of clients to store their data. Our facilities offer broad carrier connectivity options, allowing you to be anywhere in the world and host your data with us in Sydney or Canberra. We are also able to provide connectivity between our different Macquarie Data Centre locations, making your hosting accessible and convenient for you.

Physical Capacity.

Capacity refers to the amount of physical space necessary to host the IT infrastructure involved.

The capacity of a data centre is usually measured in the form of rack units. Rack units are represented by (U) where 1U approximately measures in at 19″x 36″x 1.75″ (W x D x H). Although, these measurements are a general rule of thumb and could potentially vary depending on the provider and country. It’s also important to keep in mind that rack space is indicative of total colocation space and may not represent the total space you can actually use.

Some commonly denoted rack space allocations include:

  • Half Rack – 20U of total colocation space (16-18U of usable space)
  • Full Rack – 42U of total colocation space (38-40U of usable space)
  • Private Cage – A minimum of 5-10 square metres. The usable space will always depend on your custom configurations such as allocated power requirements, as well as the number of servers, storage hardware and network equipment that need to be held.
  • Private Hall/Suite – This is a larger version of a private cage, except with the added bonus of surrounding walls, as well as locked doors that allow for more privacy and control. It is essentially a dedicated closed space within a data centre that allows for tailored configurations according to the customers needs.

Most reputable colocation providers do not offer the option of single rack, quarter rack or half rack colocation as these options quickly become restrictive and are generally limited to small scale colocation facilities. Full rack colocation is the most common form of space allocation and is becoming exceedingly more popular as a starting option due to the increasingly large amounts of sensitive data that modern businesses are required to hold.

Due to their highly secure and customisable nature, private cage and private hall allocations have become the go-to option for almost all global multinationals and government entities seeking colocation services. Private cages and halls are wholesale options only offered by highly certified and reputable colocation providers since the pricing model needs to be adjusted according to custom power and space requirements.

At Macquarie Data Centres, we’re committed to giving you the most flexible options when it comes to rack space. We understand that space requirements are subject to change and that’s why we offer so many options and the ability to reserve racks for scalability. You can take a row, a pod or a private room and even a private hall. Our world-class facilities are designed to provide you with as much space as you need, so you can switch your focus to growing the business.

Certifications and Compliance.

Certifications for data centres are provided by various institutions and are a good indicator of the colocation provider’s quality and integrity. These certifications and compliance criteria are representative of various legal and security standards that are essential to ensure the maximum level of reliability and confidentiality when it comes to processing data.

Some of the most important and well-known certification and compliance criteria include:

  • ISO – The International Organisation for Standardisation (ISO) is a global network of standard bodies and organisations that operate to provide standardisation across a myriad of different products and services. Their standards are denoted by numbers which represent guidelines for various characteristics and in the case of Data Centres, they can refer to benchmarks for process improvement, safety, as well as quality. Although the ISO does not have legally binding power, they are highly regarded and widely followed by many of the largest businesses in the world.
  • PCI DSS – PCI DSS is an abbreviation for Payment Card Industry Data Security Standard, which is a list of requirements that verify whether organisations and sellers can safely and securely process, store and transmit cardholder data for transactions whilst preventing fraud and data breaches. Since data centres are home to payment card information from a variety of businesses, it is essential that they are compliant with these standards.
  • Uptime Institute TiersData centre tier classifications were established by the Uptime Institute 25 years ago and are generally regarded as the highest standard for rating the performance and reliability of colocation infrastructure. These classifications are made up of tiers that adhere to specific requirements for maintenance, power, cooling, security and fault capacity.
  • SCEC – The Security Construction and Equipment Committee (SCEC) is a government-run inter-departmental committee that holds responsibility for the evaluation of security equipment used by Australian Government departments and agencies. Though it isn’t a necessary certification for Data Centres, Macquarie Data Centres is the first and only provider of colocation trusted by the federal government.

Macquarie Data Centres ticks all of the boxes and more, from ISO and Uptime Institute certifications, to PCI DSS and numerous government certified standards. That’s why we’re trusted by the Australian Federal Government and global Fortune 500 companies as their number one choice for colocation.

You can learn more about these and other Macquarie Data Centre compliance certifications here.


Flexibility to adjust according to changing customer requirements is a key component of colocation that is often overlooked. Data centres should ensure that their services and offerings are adaptable to changing business circumstances, whether it’s due to office relocation or just simply business growth.

At Macquarie Data Centres, we pride ourselves in providing the most customer-centric colocation services on the market. We work with you to assess your business needs and adjust our services accordingly. We can customise your colocation experience according to forecasted fluctuations in business demands or anticipated growth.

We know that every business plans ahead for growth and that’s why we’re here to facilitate a scalable colocation experience that grows with you. We love ambition and that’s why we can even reserve you a private room or hall for future growth.


Power delivery is one of the most important core features of a data centre. The reliable delivery of power and contingency measures are the key features that set the best colocation facilities apart from the rest. This means that ideally, a data centre should have multiple sources of power in the form of utility feeds, as well as backup generators and batteries to maintain power in the case of a power outage or natural disaster.

The amount of power necessary for each customer will depend on their specific requirements regarding size, capacity and the types of IT infrastructure used. However, it is essential that redundant power is always available regardless of the actual amount of power needed to achieve the intended capacity. At high-quality data centres, multiple sources of redundant power and various distribution paths are put in place to ensure that any unexpected shutdowns do not significantly impact IT operations.

At Macquarie Data Centres, we offer a wealth of power configurations to meet your specific needs. We have standard power allocations available for convenience or even the capability to create custom designs like direct 3 phase power for high-density computing. We’re always flexible, even when it comes to power.

Physical Security.

Physical security is one of the primary functions of a colocation facility and it is integral to consider when hosting copious amounts of sensitive business data. The best data centres invest significant resources and time into ensuring that their physical security standards go above and beyond standard business facilities.

Our high-level security built into each Macquarie Data Centre is one of our most coveted features. It takes an ongoing and firm commitment to security to be trusted by the Federal Government and Fortune 100 organisations.

That’s why our the vast majority of our data centres are built with a focus on a multiple levels of physical security including but not limited to:

  • 20-metre offset from all boundaries (IC4 and IC5)
  • High perimeter fencing
  • Car and Man traps at the gate
  • Secure loading docks
  • 24×7 secure reception monitored by CCTV
  • Three factor authentication including biometric scanning.
  • Highly-resistant structures built to withstand just about anything from potential threats to natural disasters

The professional services team within our Hosting Management Centre provide 24x7x365 hands and feet support, performing tasks on your equipment on your command.


Temperature regulation is just as integral to colocation since appropriate cooling infrastructure is required to facilitate the delivery of power at a data centre. As new generations of technology prompt the usage of faster processors and denser racks, providing ample cooling to fend off potential overheating and performance failure has always been one of the top priorities for all data centres. Thus, cooling configurations need to be carefully customised and developed to ensure that excessive heat does not lead to significant stress on servers, as well as storage and networking hardware. Overheating can lead to increases in downtime and critical damage to your IT components. Furthermore, inefficient cooling systems result in skyrocketing power costs and unsustainable practices due to wasted energy.

Liquid Immersion Cooling.

Liquid immersion uses a biodegradable, non-corrosive liquid that surrounds IT infrastructure to keep temperatures down. The liquid lasts for up to 15 years and is a significantly more eco-friendly, economically-efficient alternative to traditional air-cooling infrastructure.

At Macquarie Data Centres, we’re at the forefront of this cutting edge cooling technology within Australia. We have the credentials and partnerships to make use of cutting-edge, liquid immersion cooling technology that remains both efficient and sustainable even whilst handling the most high-density computing demands.

Together, with Reset Data, our liquid immersion technology supplier, our partnership is helping to set new industry benchmarks within the Australian data centre landscape.

Benefits of Colocation.

As we’ve mentioned throughout this article, colocation presents many unique benefits that would be otherwise lacking if you were to expand your own on-premises data facilities. Though the main benefits include the expertise and experience to house your infrastructure with the most efficient configuration, there are also a few key intrinsic factors that would be bereft within a non-specialised data centre.

These intrinsic factors include but are not limited to:

  • Security
  • Investment
  • Cost Reduction


Security, both physical and logical, is a key consideration for anyone considering looking to utilise colocation services. With the growing demands of the digital age, the calls for appropriate data safeguards and secure handling procedures have been growing louder. The sensitive nature of consumer information has become of utmost concern for any business that deals with this data on a daily basis.

The premises as a whole should be well secured and should only provide accessibility to key employees and tenants, meaning that 24x7x365 around the clock security like the one on offer at Macquarie Data Centres is a must for putting your mind at ease.

Our physical data safeguards are trusted and utilised by numerous Federal Government agencies within Australia, meaning that our facilities are equipped with the capacity to secure and maintain the most confidential servers in Australia. Along with government level certifications, our data centre campuses have all been recognised with various security certifications including PCI DSS and appropriate hinterbational standards.


Using Macquarie Data Centres for colocation lets you divert your energy toward your company and what you do best.

Colocation hosting by professionals lets businesses invest their resources into maximising growth opportunities, or streamlining supply chain procedures with the confidence that you do not need to invest extra resources to host your own data. This sense of stability is invaluable to business operations and with Macquarie Data Centres, we will always adapt our services to your needs so you can feel empowered to take your business to scale without the looming anxiety of having to greatly adjust IT operations.

Reduces Costs.

As strange as it sounds, colocation services tend to be extremely cost effective in comparison to hosting and managing your own data infrastructure. This is because in-house implementation tends to be more costly, time consuming and potentially less secure than services offered by data centres.

Macquarie Data Centres will always offer you the most flexible and cost effective solution for your data hosting needs. We recognise that an investment of this size is a partnership, and you can trust that we are just as committed to the success of your business as you are. That’s why our onsite Hosting Management Centre, Macquarie Hub and professional services team are here to provide 24x7x365 hands and feet support at your request, any time, day or night. So you can make the most of what you’re paying for.

The Role of Data Centres.

Research provided by the Synergy Research Group indicated that investment on cloud infrastructure surpassed $30 billion USD between April and July of 2020. Though we are slowly coming out of the pandemic’s grip, trends have indicated that the impact of remote and hybrid working models are here to stay. As the idea of a highly digitised work environment has grown, so too have instances of data breaches and security violations affecting some of the largest global multinationals. As security, cost and compliance concerns have started to become widespread, these sentiments have driven more companies to seek out colocation facilities to ease anxieties.

Colocation Pricing.

Colocation pricing is dependent on numerous factors such as the quality and reliability of the colocation features listed above. In essence, there is no rigid pricing model for colocation, as every business has different requirements that need to be met. These requirements can range from different power and cooling configurations for high-density computing, to large space allocations reserved for future growth.

Various certifications such as data centre tiers, ISO and SOC compliance can also affect the overall pricing, since these are premium features that guarantee the safety and security of your data. However, the pricing structure is not as heavily dependent on these variables compared to specific client needs.

For your convenience, Macquarie Data Centres have provided a comprehensive and detailed breakdown of significant factors that impact pricing, which you can read about in our definitive Cost of Colocation Guide.

Data Centre Tiers.

Data centre tier classifications were established by the Uptime Institute 25 years ago and have become widely regarded as the exemplary standard for rating the performance and reliability of data centres worldwide.

Data Centre Tiers are made up of 4 tiers which are each defined by specific metrics that pertain to maintenance, power, cooling, security and fault capacity. Each of the tiers are progressive and built upon previous tiers, meaning that a tier will always incorporate the requirements of any tiers that precede it.

Tiers are not directly reflective of price, but they do indicate that more resources are required to supplement the facility with the specified standards. It is also worth noting that tier classifications are not necessarily an indication of quality levels, i.e. a Tier IV data centre will not always perform better than a Tier II, since factors such as efficient cooling configurations and security measures will play a larger role. However, if a data centre has all the other appropriate measures in place, Tier systems can be a great indicator of going the extra mile to ensure the best possible environment for your business’ data.

  • Tier I involves a basic infrastructure design that offers an uninterrupted power supply and a dedicated area for IT systems. It offers bare bones redundancy measures, with a backup power supply in the case of power outages.
  • Tier II encompasses the same characteristics as Tier I, but offers additional redundancy measures for cooling and power distribution. More importantly, components can be removed for maintenance procedures without shutting down the entire facility, though unexpected shutdowns could still result in potential downtime.
  • Tier III data centres offer all of the aforementioned standards, but with the addition of independent and isolated infrastructure that allows for additional power resources and distribution paths. Tier III offers these separate systems as redundancy measures to ensure that the failure of one system will not compromise the operations of the other. This means that all equipment, as well as power and cooling configurations are more fault tolerant, minimising the likelihood of downtime during maintenance, repair or replacement.
  • Tier IV ensures the highest level of fault tolerance, though in certain circumstances this could be characterised as excessive. Tier IV means that every single piece of equipment must have a fault-tolerant design to facilitate a holistic fault tolerant model. This mandatory fault-tolerant design means that each component requires continuous cooling to ensure stability even if one of these components were to fail.

Our IC2 and IC3 colocation facilities are Uptime Institute Tier III certified. Our centres have multiple paths for both power and cooling, and have staff on-hand at all times to maintain and operate IT systems without them going offline. We know that even the smallest instances of downtime can result in costly consequences for large-scale e-commerce or SaaS businesses and that’s why you can trust us to provide the leading-edge facilities that secure your data and servers.


SOC which stands for Systems and Organisation Controls refers to a series of reports that are utilised by information service based organisations for auditing purposes. These reporting standards are utilised by data centres and operational service related organisations globally. They are structured around 5 distinct categories that are as follows:

  • Security – Firewalls, Intrusion Identification, Multi-stage or Multi-factor Authentication
  • Availability – Performance Monitoring, Disaster Recovery, Incident Handling
  • Confidentiality – End-to-end Encryption, Access Controls, Firewalls
  • Processing Integrity – Quality Assurance, Process Reporting, Reporting Accuracy
  • Privacy – Access Control, Multi-factor Authentication, Encryption

These reporting structures were designed by the AICPA (American Institute of Certified Public Accountants) and are now recognised by many organisations as the standard of transparency regarding organisational accuracy, confidentiality and integrity.

​​SOC reporting is characterised by levels and they are as follows:

  • Type I – Details the service organisation’s systems and if the controls in place adhere to relevant trust principles. (i.e. Is the design and documentation process accomplishing all the goals defined in the report?)
  • Type II – Much like type I, it reports the operational effectiveness of the controls in place, but looks to assess the effectiveness over a designated period of time (usually 9 to 12 months)

What is SOC Compliance.

The AICPA divides SOC reporting into 3 categories, SOC 1, SOC 2 and SOC 3. These reporting types do not represent levels of transparency, but rather, help to present the information to a different set of audiences.

SOC 1 and SOC 2 are intended for limited audiences, generally users or superusers with extensive knowledge of the system. SOC 3 mostly entails the same materials as SOC 2, but is less specific and translates the reporting to a more general audience.

Organisations that complete audits according to these individual guidelines or standards are said to be SOC compliant.

  • SOC 1 compliance data centre. SOC 1 compliance relates to internal control over financial reporting, or in other words, it shows users that their financial information and transactions are being handled securely.
  • SOC 2 compliance data centre. SOC 2 serves as a framework that allows organisations to demonstrate the safety and security measures in place for their cloud and data centre controls. SOC 2 compliance is vital for any colocation provider, as it assures users that adequate safeguards are in place to protect and preserve their data. It is a primary indicator that the data centre is fulfilling its obligations and promises to its clients.
  • SOC 3 compliance data centre. In essence, SOC 3 compliance is based on the same principles as SOC 2. However, since it is intended to translate the aforementioned frameworks to a much broader audience. It is primarily for the purposes of providing understandable SOC data to 3rd parties.

Colocation Considerations From Singapore To Australia.

Colocation often provides the most value to global companies looking to expand their operations to meet user demands elsewhere in the world. As trade between Singapore and Australia continues to boom, more and more Singaporean businesses are looking at the Australian market as an attractive opportunity for continued growth.

Macquarie Data Centres are proud to offer coverage to support Singapore Enterprises. We are carrier-agnostic, meaning that colocating with Macquarie Data Centres ensures a hassle free setup at to our carrier-neutral data centres. This is a perfect option to bring your services closer to your Australian customers without substantial investment into constructing your own data centre. As Sydney is ranked third in the global data centre market sphere, our new IC3 location could be perfect for your Singapore to Australia colocation needs.

Colocation Considerations From The United Kingdom To Australia.

Our Commonwealth connection means that business opportunities between the United Kingdom and Australia have continued to remain abundant and highly-profitable.

With Australia becoming a popular destination for UK business expansion, Macquarie Data Centres offers colocation services from the United Kingdom to Australia so you can make the most out of market potential without worrying about coverage and data hosting. Our colocation services are being utilised by over 43% of Australian Federal Government entities, giving you the reassurance of security and reliability knowing that you’re dealing with a Federal Government level colocation provider.

Colocation Considerations From The United States To Australia.

US businesses looking for expansion into the Asia-Pacific region have always held the Australian market in high regard, as it offers the convenience to do business with a conveniently located English-speaking nation. Macquarie Data Centres offers the perfect solution for colocation from the United States to Australia. With high-coverage data centre options to choose from in convenient city locations, an enterprise based in the United States can easily enter the Australian market through our colocation services.

Macquarie Data Centres are one of the world’s most reputable and highly certified data centre operators. We’ve been delivering optimal data hosting solutions for the largest Australian businesses for over 20 years.

Supported by over 200+ engineers who are security cleared to government standards, we ensure 24x7x365 protection and support. We are used and trusted by nearly half of all Federal Government agencies, a testament to our procedures that help maintain the highest standard of physical security.

So, whether you’re considering site selection or cloud expansion, we can provide tailored solutions for and support for all your global infrastructure hosting projects. What’s more, because we operate our own sovereign Australian data centres, we can customise any design for your needs today and accommodate your growth for tomorrow.

We love a challenge – if you can think it, we can build it.

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