Co-location hosting is basically renting rack space in datacenter that is equiped with network connections, these rented rack space are specially made for server hosting, the rack is prepared with regular and backup electricty sockets and network connection sockets, and your will be placing you own server hardware in the rack space rented.
Unlike dedicated server hosting that the web hosting provider actually owns the server hardware, co-location hosting does not provide any server, you will have to purchase your own server hardware, co-location support will not be handling any of your own server issues, no matter it is a hardware or a sofware issue. Co-location hosting provider is only responsible to provide a secured rack space with backup electricity, monitoring internet network traffic to the datacenter and maintain the network connections to the datacenter.
There will be no support available in co-location hosting to look into your server software and hardware problems as compared to managed hosting, you are completely on your own to manage your own server software as well as replacing any faulty server hardware.
Hosting fee is measured on how big the rack space you are renting and monthly bandwidth allowance. There are other initial cost to purchase your own server hardware and software, and there must be good technical knowledge on managing a web server to look after your own server in a co-location hosting.