NATIONAL NEWS: Five-star hotels where the guests are caged : These hotels do not have swimming pools, but they can use enough water to fill several. There is no cable TV, but there is enough internet capacity to transmit hundreds of movies simultaneously. The guests are locked in their rooms at all times - but the room service is extremely attentive. Internet hotels do not look like much, but they provide five-star accommodation for computers. On the outside, they are faceless factory buildings, often without windows, and with no indication of the value of the computer hardware within. On the inside, rack upon rack of beige servers hum noisily, feeding websites with constant streams of information and carrying millions of virtual £s in e-commerce transactions. The servers are usually kept in cages, or secure rooms, as the hardware itself and the data that pass through it are very valuable, and vulnerable to tampering. The steel bars make the hotels look like prisons. Per square metre, they cost rather more. A standard unit 60cm x 60cm x 244cm, about the size of a broom cupboard, can cost £s 12,000 per year. Keeping a prisoner in a British jail cell costs £s 23,000 a year. Internet hotels, also known as co-location facilities, can loosely be defined as centres where companies with big internet operations, frequently telecoms carriers who look after the web traffic of many of their customers, can house their web servers - the engines of the internet, which process the traffic to and from websites. With ultra high-speed telecoms connections, massive power supplies, arctic air conditioning and squads of trained engineers, the facilities are capable of housing thousands of computers connected to the internet in optimal conditions. Internet hotels are different from, but related to, web hosting facilities, where specialist information technology companies set up and maintain websites and e-commerce operations for their customers. The service provided by hotels is more sparse: customers just rent space in the facility and put in their own hardware, running whatever software they require. The facilities are staffed by trained personnel, who check that the servers are ticking over, but most customers will also patrol their machines with their own computer staff. Prime locations are essential: the hotels should be near the customers they serve, such as City banks, as the high-capacity fibre-optic communications pipes they require are expensive to run far. Some of the sites are cooled by the kind of water-circulation systems normally associated with nuclear power plants, because the computers generate so much heat. The air conditioning at Redbus Interhouse's Docklands building, for instance, is capable of keeping the building cool under the heat of 2,000 one-bar electric fires. That kind of power consumption has led to concerns over the ability of the electricity network to keep up. The hoteliers are taking no chances: Redbus's facility is connected to two electricity ring mains and has a back-up diesel generator. The rewards are worth it, however. Tarifica, a telecoms consultancy, has predicted that independent co-location companies would reap total revenues of £s 3bn in Europe this year and £5.7bn in 2001. A typical facility costs £50m-£60m to set up, but would repay the investment in 12-18 months. Copyright © The Financial Times Limited