LONDON, England (CNN) - As hotels go, "London II" may lack the brand-name cachet of the Ritz or Savoy.

But Global Switch, the London-based corporation developing the 672,000-square-foot facility in the city's Docklands district, knows that names are not what matter most to its high-powered clients.

Except for standard amenities such as catering, offices and rest rooms, London II bears little resemblance to its more well-known cousins. But it delivers something most hotels don't: 50 megawatts of daily electrical power, a computer-controlled environment and proximity to London's major telecommunications networks.

London II isn't a hotel for travellers but for computers. It is one of 12 Internet or telco "hotels" -- including 10 in Europe -- that Global Switch is either developing or already operating worldwide.

These buildings serve as one-stop storage depots and service centres for switching networks that companies deem too vast -- or valuable -- to accommodate on their own premises.

Seen from the exterior, the average Internet hotel warrants about as much notice as an abandoned warehouse or printing plant - which, indeed, many of them were in past lives.

Inside, however, the facilities - also known as data or carrier centres -- brim with enough floor-to-ceiling fibre optic cables and computers to rival the command deck of the Starship Enterprise.

A bumper crop of such centres has arisen in California's Silicon Valley -- stretching the ability of utilities there to cope.

Recent power cutbacks in California have been spurred, in part, by the explosion in such data centres. Pacific Gas and Electric, a California utility, cut power to almost 100,000 customers in June 2000 after being swamped by telco power demands.

For London II, its guarantee of energy is the outcome of long negotiations between Global Switch and London Electricity, the city's biggest utility.

Coupled with promises of a secure, computer-monitored environment, on-site IT expertise and back-up power generators, the facility offers clients a reliable place to park the banks of hardware that drive their networks.

Building a 'digital highway'

Artist's rendering of a second, 672,000-square-foot facility Global Switch is building in London

Although Europe has fared better than California, utilities here say challenges lie ahead.

Amsterdam is one of a handful of European data centre hubs where utilities are scrambling to meet growing demand for power management by Internet and communications-driven companies.

According to Dutch utility Nuon NV, which covers Amsterdam, the companies are demanding as much electricity each day as it normally supplies to the entire city - 1,200 megawatts.

As a result, city officials are investing 500 to 700 million guilders ($201.4 million to $282 million) over the next few years to build a "digital highway" to accommodate the power-hungry newcomers. The city also has introduced a new property tax bracket for the telco hotels.

Until Amsterdam completes its revamp, Nuon is preaching patience to over-ambitious customers.

"We give them a very realistic plan and tell them they will have to wait," said Nuon spokeswoman Fransce Verdeuzeldonk. "We are sort of educating them because ... we have to tell them it's not possible, you want so much (electricity)."

Verdeuzeldonk says the investment carries an element of risk but that the greater danger lies in not planning ahead.

"The technologies these companies are working in will only keep growing. Can you ever imagine a world without the Internet? These companies think in a different way than we are used to, they ask for five times what they need."

Analysts say it is still early days in Europe for telco hotels. While the market is continuing to expand, the rate of growth has slowed from the breakneck pace that marked the early phases of the boom.

"Some of the more aggressive forecasts have been scaled back a bit by the vendors," said Richard Endersby, an industry analyst with Watford, England-based Probe Research. "Some data centres have been delayed in opening."

Expert: Stand by for rebound

Internet hotels are packed with cables and computers

Andrew Jay, of London commercial property consultant Insignia Richard Ellis, said the slowdown began in October 2000 when capital markets retrenched.

But he predicts the market for telco centres will resume its bullish growth when industry consolidation kicks in -- probably in the first or second quarter of 2002. In the meantime, utilities are using the lull to improve their power grids to be better prepared for the next growth spurt.

"Consolidation hasn't started yet, but I think a lot of people are talking to each other," Jay said.

Craig Lucas, an engineer with London Electricity, said the utility has been trying to assess future demand.

"A lot of the customers for whom we worked out a plan are on ice. The whole industry seems to have paused for breath," he said.

Companies that might have built two facilities and were planning to develop a third have deferred those plans, he said. But that could change if the stock market picks up and the mood shifts.

Meanwhile, as the industry has matured, Internet hotels have begun rolling out more services than simply floor space and power.

Today, data centres offer clients a menu of services ranging from fibre-optic connections and IT expertise to CCTV surveillance and firewall protection, Endersby said.

The next phase of growth, already in evidence, will take data centres beyond the hubs to "second-tier" cities such as Birmingham, England, and Bonn and Munich, Germany, he said.

Meanwhile, Stockholm, Sweden, is already what Jay calls a "gateway" to Eastern Europe. In France, attention is likely to focus on Lyons and Marseille, while Helsinki, Finland, and Copenhagen, Denmark, are seen as attractive subsidiary hubs in the Nordic region.

Another trend may be a growing tendency by telco hotels to bypass electrical utilities and generate their own power. In what Jay calls a groundbreaking move, IX Guardian, a Web-hosting subsidiary of Guardian IT, has turned towards self-generation after running into power problems.

The company is among the first in Europe to use a technique known as CHP, or combined heat and power, to create new energy from power-generated heat. The CHP Association claims the technology reduces energy use by more than a third, compared with traditional power stations or heat-only boilers.

For now, however, the method is too expensive to install to be a feasible option for many customers.