Fees, Guarantees And Contracts

Service Level Agreements, Guarantees and Uptime

A colocation provider may wish to impress you with the statement that they “guarantee” their service according to a Service Level Agreement (SLA), which is often deceptively referred to as a “100% uptime guarantee”. While these agreements do technically apply a guarantee to some aspect(s) of service (typically power and networking), they are something of a marketing tactic, designed to convince you that the provider believes their service to be so solid they are willing to put it in writing and put money on the line. It is easy to construe this as a poIf you bother to actually read their SLA, you will discover that all it says is this: if they have a service outage that affects you, you can get a credit against your bill for downtime, provided that you report it in a timely manner (right away, in some cases) in the prescribed manner (usually in writing, with supporting details), and that a review of their logs corroborates your report. This is NOT a guarantee that their service will never go down, or that if it does go down, it will be resolved in a timely manner. It’s also not a guarantee that you’ll get the credit (if you report it too late, or you can’t prove the outage). And in any case, you can never reclaim the time that you were down – it’s gone forever, and no SLA will reimburse you for loss of business caused by the downtime! So if you are worried about a lot of downtime with a provider, an SLA might be a good service feature – but then again, why would you choose a provider with a lot of downtime anyway? Choose a provider with a reputation for stability instead, and uptime will take care of itself. Any provider worth your time should be able to provide you with uptime stats for the past twelve months – if they can’t, or won’t, move on.

Setup Fees

Hey, nobody likes paying setup fees, right? The lack of setup fees can be very attractive in that it saves out-of-pocket money up front. But, just like price, don’t put too much emphasis on this.  For one thing, you can pretty much assume that the provider will recoup any costs associated with provisioning your service one way or another – so if they don’t collect them up front, they’ll bury them in your recurring monthly fees, plus interest, thereby driving that cost higher. The bottom line is that you will only pay a setup fee once; a reasonable setup fee should not disqualify a colocation provider. On the other hand, a cut-rate provider who is more likely to waive setup fees can end up being much more costly in the long run.


The vast majority of data center colocations are a contract-based service with a term, with a one year commitment being a common starting point. When soliciting colocation offers, you can assume that there will be a term commit; if the provider does not specify it in the quote, ask. When just starting out, a year can sound like a long time – you may chafe at the idea of signing on the dotted line for that length of commitment. But here’s the thing: once you’ve gone through the trouble of getting installed and set up in a colocation facility, you are not going to want to leave anytime soon – especially once you’ve gone live! Furthermore, if you’ve taken an Internet bandwidth drop from the colocation provider, you can’t take those IP addresses with you, which means that moving will involve re-configuring your network, in addition to server downtime and time out of your busy schedule to make the move to a new data center. On the other hand, the contract offers you something that you may not have even considered: price protection! Without a contract, the provider can raise your fees at any time, because you have no agreement locking in your pricing for the length of the term. Ultimately, if you’ve done your homework in selecting your provider, signing a contract should present no problem. After all, the point is to NOT move, so don’t be afraid of that contract!