Data center colocation agreement

A data center colocation agreement is the contract under which a data center operator leases space, power and cooling to a customer that installs its own servers. In retail colocation, the agreement takes the form of a master services agreement with order forms; in wholesale colocation, it looks more like a commercial lease on a hall or a building. The operator commits to power availability and to a temperature and humidity range at the rack inlet. The SLA (service level agreement) puts numbers on those commitments, often 99.999% for dual-path power, and on a breach gives only a service credit, calculated as a percentage of the monthly fee. The operator's liability is then capped, commonly at a multiple of the annual fee or at the fees billed over the last twelve to twenty-four months, with consequential damages excluded, data loss and business interruption included. Both parties waive their claims against each other and have their insurers waive subrogation. In return, the customer must insure its own equipment, carry liability cover at a set amount and name the operator as an additional insured. For the underwriter of the customer's policy, the consequence is plain: when the hall burns, the loss stays with the insured. Recourse against the operator is closed by contract, except for gross negligence or willful misconduct, which French law does not allow to be waived. The policy still has to accept a waiver of recourse given before the loss; otherwise the insurer can hold the lost subrogation against its own insured. Cross-connects and ancillary services often run on terms of their own, to be read separately.