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Data centres
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Bearing in mind the above, you can see that the ideal place for a web server is in a physically secure climate controlled room with 24/7 engineering support, fire suppression systems, multiple redundant sources of electricity, and multiple internet connections that leave the room down distinct conduits. This is expensive.
Space in data centres is typically sub-leased many times over. Many hosting companies refer to "our data centre" in their advertising, when in reality they are renting a couple of "U" of rackspace.
For example, Telecity operate 9 data centres in 7 European cities; their smallest rentable space is a lockable "quarter-rack" - which is big enough to hold 10 thin (1U high) servers.
For this they charge £200/month. That's just for the space; bandwidth costs extra.
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