Hi guys,

Do you think this will create a massive affect on the web hosting industry?

http://msnbc.com/news/723370.asp?0dm=C11TB

Originally posted by rey
Hi guys,

Do you think this will create a massive affect on the web hosting industry?

http://msnbc.com/news/723370.asp?0dm=C11TB

No, it is not really that relevant to the web hosting industry. I don't really see it affecting the major Internet backbones, one of the few areas where they are still making money.

I have 17 years professional experience in the telecommunications industry (14 at Alltel and 3 at AT&T). I got out of it and into the software (primary) and web hosting (my hobby and side-business) when the getting was good.

I do see it continuing to affect the tech industry as a whole however. The telecommunications industry is HUGE (up until just a couple of years ago, AT&T alone had over 120,000 employees). Their capital spending was huge. The money that the telecoms, both large and small, spent over the past 10 years really drove the tech industry. Suddenly they're not buying truckloads and truckloads of fiber, routers, PCs, switches, hubs, cable, microprocessors, and software. They cut funding on R&D to the bone. If you don't see the direct relation between that and technophiles like us, spend some time looking at the raw number of patents originating from Lucent Technologies and the old Bell Labs (AT&T).

But, I don't see web hosting, dial-up ISPs, or existing broadband services being affected. I do see a slowdown in the expansion of broadband to areas not yet covered. The telcos just dont have the millions and billions required to spend on upgading the networks anymore.

Of course that's just my opinion, I could be wrong...

Originally posted by IceDogg

Of course that's just my opinion, I could be wrong...

How very Dennis Miller of you :D.

I disagree slightly...In the short term this could be a boon for bigger web hosts. Most of the major backbones are controlled by the telcos who are desperate for revenue, so they are offering very good deals on bandwidth right now.

However, if the SEC investigation, and continued cash shortages persist, you are going to see a major consolidation in the industry (even more so than now), and you will wind up with 2 or 3 big players controlling 95%+ of the Internet backbone, that will most likely lead to price increases, those price increases will definitely trickle down to smaller hosting markets.

Originally posted by uuallan


How very Dennis Miller of you :D.



My idol and role model...

No... I think that it would.

When you are talking the amount of money and jobs that are apparently in question... surely it will have an effect on the economy as a whole. Do I think it will be substantial? (No)

The bulk of this situation was brought on by that emphamous enrom and their accountants... not entirely, I know. But, it surely has not helped the cause. (The fat lady hasnt sung her tune on this one yet) Now over this scandal, heads are going to roll, and I would venture a guess that several may find themselves starring at the sky through six feet of dirt, over this thing. (Most will not be self-inflicting injuries or heavy dosages of pills, unless MADE to do so by the big boys... while they watch)

I think there were a few squalkers, which when the heat got to be too much... they started spouting off with joeblow did this and bettysue done you know who!
Honestly, I dont think it is as big as they are making it to be. (the telco scare)

As for affecting the hosting business... not significantly, if at all.

Just my 2 cents

snoooky~

I think that if you look at the trends, you will know that eventually it will trickle down to the hosting market.

if the big boys consolidate, and begin to push prices back up so they are making a profit again, it will come down stream.

Who will it hit the hardest? I think the little and mid sized hosts that have built their business on under priced plans. They will either have to raise their prices a bit to compensate, or they will loose money.

No telling how soon things will happen, as these investigations can take a while, but then it will begin the ball rolling. You will see the price wars on bandwidth dissapere, and then the cost will begin to rise.

I don't think it will hit hard and all at once, so as hosts, I would just think keeping yourself prepaired for what ever may come is the best approach.

Tim L

Originally posted by superiorhost
Who will it hit the hardest? I think the little and mid sized hosts that have built their business on under priced plans. They will either have to raise their prices a bit to compensate, or they will loose money.

Tim L

These are very good points Tim, and I had not looked at it from this perspective previously.

Whether or not the telco issues will trickle down to us (web hosts) is yet to be determined. However, I do see that the web hosting industry is following in the exact same footsteps as what brought the telcos to their knees. Too many "under priced plans" as you put it.

When long distance phone calls were 19+ cents per minute, these companies did very well (obviously). Then, MCI came along and started selling for 15 cents/minute. Sprint entered the picture and matched MCI's price. AT&T was forced to drop their prices. Then they were all charging 10 cents/minute. Then, along came the resellers like GTC Telecom, Big Red Wire, Affinity, etc at 7, 5 and even 4 cents/minute. Now, guess what, nobody is making any money in long distance!

How long before we, as web hosts, price ourselves right out of business? There more and more hosts offering $3.99 per month plans. Sure, the quality may not be as good as a $12.99 per month plan, but most users don't care, any more than I care if there's a little static on my 3.9 cent/minute long distance phone line.

Hmmm.... Makes you wonder.

I pay 1.8 cents for long distance. :)