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'Colocation' in the IT industry refers to the location of physical equipment and interconnection facilities of different telecommunication providers (Telcos), Internet Service Providers (ISPs), Application Service Providers (ASPs), managed network and hosting providers, and such other providers of e-commerce and communication services all in the same building.

The main reason such companies want to share physical space is to be part of the same network hub, the principal element of which is 'connectivity', i.e. the closer Telcos and providers are to each other, the more reliable is the service.

However, since all the different Telcos and providers will be competitors of each other, they will prefer to place their equipment in the premises of an independent, neutral organisation which can guarantee firstly, a high degree of security, privacy and confidentiality; secondly, neutrality, in respect of not being associated with or promoting one Telco or provider over another; and thirdly, reliability of the physical environmental requirements for their equipment.

Such requirements include reliable power and immediate back-up power (called "redundancy") in the event of power failure; air conditioning for the environment around the equipment and 24 x 7 x 365 security and support staff to ensure continuous uptime.
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