If someone stops paying for private data hosting, then I'd expect them to lose private data hosting -- in full. I don't see how the "private" in "private data hosting" could be seen as severable without explicit agreement to such a provision.
By analogy, it'd be like if someone requested a plumber come by to their house to replace their toilet. Then when cancelling the request, the plumber said, okay, we can cancel, but the customer must accept the free version of this service: they'll come by and take the old toilet away -- because this is a free service, cancelling the paid version merely cancels them putting in the new toilet, but they still get the old one.
It seems to me that a customer who cancels something shouldn't be forced to accept a substitute service. It'd seem reasonable for the service-provider to ask if the customer wanted the substitute, but language implying that the customer must accept it seems wrong.
But, is that what's happening here?