With Co-location Hosting, customer owned servers are located in the service provider's datacentre - often referred to as 'rackspace'. The service provider is responsible for providing utilities such as power, air conditioning, fire suppression and connectivity to the internet. The customer owns the hardware and software and is responsible for all management and maintenance of the server hardware, operating systems, applications and business processes.
Co-location cost are typically split into 2 components, physical space - usually measured in units (U) of rackspace, and the bandwidth of the data connection to the internet. Costs start at a few hundred pounds per year for a small (1U) server.