Server colocation is an effective way for both small businesses and individuals who wants to avail all the possibilities of owning a website with more and more hits without paying for the bandwidth that such popularity requires. You still pay a fee, but it isn't for bandwidth — it's a rental charge.
A company will store all of its sensitive data — web pages and downloadables, for example — onto a server, and then physically haul the server to a different location. This location is the home operation center of the server colocation provider. Once you have your server there, the server colocation provider will take over and install your server in their rack.
Here, you are sharing bandwidth with the server colocation provider; this is how you avoid bandwidth charges. You can also rent a server from the server colocation provider. In that case, you own no part of the process but the data.