Why wouldn't they just rate a 20A circuit as 16A if that's all that's usable? What's the benefit to rating it as a 20A circuit if 4A are unusable? I feel like I'm missing something.
Believe it or not, this is standard electrical engineering.
The breakers in your home breaker box operate the exact same way. A 20A breaker will trip once you exceed a certain threshold, which I believe is 16 or 17. They're rated to go to 20 by the factory, but to prevent problems with overloading and causing fires/explosions/etc, they purposefully break at a lower threshold.
So this isn't just a colo price scam thing, this is the way the world works.
Peak draw is less than typical draw. If the fuse blew at 16A, you'd only be able to use 12A. So they give you some headroom. But if everybody draws at 20A all the time, the building melts down. Soft quotas vs hard quotas.
1. As mmt mentions in another comment, that's the way the U.S. safety codes rate circuit capacity.
2. A 20 A circuit breaker is allowed to trip at 20.000001 A. Derating the continuous load provides the safety margin for reliable operation, even using inexpensive circuit breakers.
