Many of our sellers use Amazon S3 as an extremely reliable and affordable file hosting service; in fact, that's what we actually use for long-term download storage/caching and delivery for our own download fulfillment feature.
You should be able to use any file hosting service that can provide a static URL directly to the file itself which can be accessed by our server script -- i.e., as long as the file URL does not expire or change, does not require going through the file host's download page, and does not need to be accessed by an actual Web browser program.