A colocation centre ("colo") or carrier hotel is a type of data center where multiple telecommunications network or service providers, such as telcos or ISPs, site their connections to one another's networks (points of presence).

Most peering points are sited in colocation centres.

These sites are often used for web hosting.

Most colocation centres have high levels of physical security and multiple redundant power and air-conditioning systems.

A typical Colocation centre setup would consist of the following hardware and services:

Building:

• Usually build near a GlassFibre ring.
• Guarded 24/7 and secured with closed circuit cameras.
• "Clean" rooms to ensure optimal running conditions for computer and network hardware.

Power:

• Connected to two or more different power stations/grids.
• Inline power backup using a system of UPS batteries.
• Possibility to connect two different grids of power distribution to one server.
• Most also have Backup Diesel generators standby to support power delivery.

Connections:

• Because of the high concentration of servers inside a colocation centre most carriers will be interested in bringing direct connections to such buildings.
• In most cases there will be a larger Internet-Exchange hosted inside a colocation centre, on which customers can connect for peering.

Most colocation centres offer different types of services to customers ranging from dedicated suites/rooms or cages to smaller racks or partial racks. Some colocation centres also offer some degree of SLA's to support a wide range of computer and network related services, for example server reboots, hardware replacements, software updates etc.

There are a few key differences between a dedicated server and colocation servers. Dedicated servers tend to be owned and rented out, while a colocation server is one that you own.