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Power, Performance and...Tax Breaks? A Colocation Hosting Audit

By: Kaylie Gyarmathy on January 13, 2015

Data centers are coming to town — and for municipal governments, it's nothing but good news. Consider the case of Orangetown in Rockland County, New York. Last year, the town scored big with a $710 million, 131,805 square foot data center facility built by media giant Bloomberg. In addition to new jobs the center also brought substantial new tax revenue, and Orangetown is now considering ways they can encourage other providers to build local.

Both towns and tech companies benefit from this arrangement, but what about end users?

Think Global, Build Local

That's the mandate of a new data center breed, one that's carrier-neutral, colocated, and future-proof. These centers are springing up across the country, catering to the needs of companies that want data close to home without compromising on performance or power.

In many cases, however, building on familiar soil is costly. For the University of Memphis to fast track its mobile medical device data center — which aims to capture the information from thousands of Americans using wearable health devices — a $10.8 million grant from the National Institutes of Health was necessary, and something that U of M president David Rudd calls “the single most significant research accomplishment we've had in the history of the University.”

Companies considering their own data center build, meanwhile, often find their enthusiasm dampened when costs skyrocket into the hundred-million dollar range and extra funding simply isn't available.

Changing the Game

Orangetown is hoping to attract interest by providing tax breaks on new data center builds, while the State of Colorado has plans to make some data center equipment tax-exempt by 2015. For any company auditing the idea of spinning up their own data facility, however, these savings aren't enough to create manageable cost-to-benefit ratios. When applied to a colocation formula, however, the numbers start to change.

Carrier-neutral, colocated data centers are often considered the next logical step forward in the industry, since they offer all the benefits of dedicated resources with the cost efficacy of a shared space. The only downside? If a colocation provider is too far from your main office or storage site — more than a two hour drive, for example — it becomes prohibitively expensive to send IT professionals out for upgrades or server maintenance. The rise of municipal tax breaks for large-scale data center projects, however, is a win-win-win: Towns get more revenue, providers lower their cost and end-users get access to local performance augmented by global

Bottom line for the colocation hosting audit? You end up ahead when colos come to town.

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