Hi,

I've seen some deals on dedicated servers lately where companies are offering 400, 450 and even 600 gigs a month in bandwidth -- PLUS the server -- PLUS electricity -- PLUS everything else for about 100 to 130 dollars a month.

I don't have a dedicated server yet. But I do plan on getting one or more in the future.

My question is, how can companies offer this much bandwidth -- and throw in the server to boot -- for so little compared to what others charge?

One company in my area has a very good rep, is in a good data center and offers co-lo for $45 per "U" and charges $3.00 per GIG of bandwidth when you buy 100 gigs of bandwidth or more per month.

What's the deal? Are these companies "overselling" like most hosting companies who offer 5 to 10 gigs of bandwidth with their plans for under $10 per month, realizing most people won't use their alloted bandwidth?

Would these places offering lower cost dedicated hosting be able to handle the traffic if most people actually used their alloted bandwidth every month? If you use up all the alloted bandwidth instead of a fraction of it like most people likely do, would they -- in one way or another -- let you know you weren't really welcome and "invite you to leave" in some way?

Is the quality of the bandwidth offered adequate for a person using their dedicated server to run a hosting company? What's the difference in "quality" of the bandwidth?

I really would like to understand this. I sure don't want to pay $1200 per month for bandwidth I can get elsewhere for $99 (assuming I would need 400 GB/month -- lets say for discussion I do).

However, I don't understand what the difference is between the place that would charge me $1200 per month for 400 gigs and the place that would charge me $99 per month -- and throw in the server to boot!


Anybody know? Please share. I hope folks can explain what's going on without attacking any companies. I'm new, learning about hosting, and trying to understand it better before I start my own hosting company. I would have no problems administering my own dedicated server. I understand a dedicated server is NOT a managed one.


Thank you very much,

Louis

First of all, you can't look at a small local company and compare it with a company like RackShack.

Ev1.net owns rackshack. And even if Rackshack totally BOMBS and is a total waste of money. Ev1.net doesn't care because their pockets are deep enough where it won't matter.

Some companies offer Cogent BW which is around $3000/Month For a 100Mbit Line. This has increased the amount of companies that offer High BW and for low Pricing.

Then you have the companies who open a DC in their work office, use the Cogent line that their office has and call it a datacenter with wires on the floor and the routers and servers sitting on the desk right next to the cup of coffee. :rolleyes:

Anyway, there are many reasons why people do it and how they do it. The thing is, Small Companies can't afford to offer $99/Month Pricing Like Large Companies.

But you need to look out of the WebHostingTalk community. I have to say that a lot of the people here are Teenagers and thats why the market around here is $99-$120. If you leave WHT and places like Ebay and move to higher markets. Dedicated Servers run for around $300/Month Min.

Thanks For Reading

Hi Neo3.net,

Could you share any places you suggest I read/go for more info?


I sure wouldn't want my dedicated machine to be in the type of open office environment you described -- complete with coffee cup right next to the router.

What about a large company with a real data center offering low cost dedicated servers? What does one miss or give up when going with them over the other type places you have in mind (that I hope you might share) that cost $300 per month minimum? Is it the BW quality? What?

Thank you very much for sharing. I appreciate it!

Louis

Well, here's my input...

If the company own its own lines (DS3, OC48, etc...), they can offer as much BW as they decide... They don't have to pay more for it...

As for one of your questions "how can they throw in the server also?" I just kinda hve to ask you, how can they NOT throw in the server also... Bandwidth isnt a tangible item, it requires a server, doesn't it?

No doubt that Rackshack's prices are great for the server and bandwidth, for example. However, they can't make any profit if the majority of people use their bandwidth allowance. However, you can bet that _most_ (I mean, everyone, other than excluding a few clients) [I assume this] people there are only using about 10 to 15 gig's a month, and maybe another 10% to 15% are using 15 to 40 gig's a month, and the final 3% to 5% are using above that. I get these estimates from absolutely nowhere and I can be way off -- but given user's and what they use on virtual and dedicated systems, it's usually not much. Plus, it's not like they are using the most desirable hardware either, so that cuts down on costs a lot. Added that they buy those in bulk, to cut down even further. Now, add the fact that they don't even do anything but pre-determined setups using so-many pre-configured images (so there's no effort in setting the servers up), and they don't offer any support beyond simply making sure your system is connected and the network is up and that they installed the system in working condition. For most of us, this is all we actually want -- that's all I want, although I (personally) would have big issues with the initial, generic and not so great configuration/setup images they do/use and the hardware/brands of the system itself. Finally, the bulk on bandwidth for an already cheap price. I'm sure they're doing good, but that model would make me nervous. They might be around for as long as I live, but they also open themselves up to the potential of being out of business next year.

Seriously. If all or the majority of users used their allotted bandwidth, they'd be in the red, and in a bad way and for a very long time. Of course, the other scenario's with any dedicated provider, is people can find reasons to leave or not want to continue because their "big plans" for making millions online didn't pan out, so they drop their contract (if there is even one). So, anyone can go under, but I personally don't like the business model of doing so much bulk and so much overselling, that if people ever started using what they were promised, that you'd end up end the ER with multiple strokes. But, it works for them, at least for now. There's also no reason why it won't continue to work. There's also the chance that it could inevitably be the demise of them too. That alone makes some people nervous and want to use someone that's not looking simply to sell in quantity and just undersell everyone else in the market. That does work and it works well, but that's usually the best way to make a lot of money quick, because it doesn't usually last. So, it all depends on what you want. I'm not at all saying RS's model won't or isn't working, but I just don't feel it's very solid and I'm one of those people that would have to think really long and hard about signing on with them because of that -- if I was ever looking for a dedicated server.... to be honest, I'd have some other people in mind, even if they did cost more.

So, that's how it works and people have different opinions about it -- these are mine expressed above. I wouldn't say it won't work or it's a bad thing, I just would prefer something else... but I can see why those packages are attractive. Finally, I would just say, that at least RS isn't a flyby night and they've been around and will be for as long as they are in business (I assume), but there are a lot of "providers" that will try and match these deals or come close (or even beat them), and while their offers might seem attractive and worth just as much of the risk, you should consider that RS has at least proven they've been there and aren't looking to grab a lot of cash and scram the day people start noticing they aren't getting what they paid for -- while other company's might have that intention, or at least that result. Indeed then, sometimes, it's just not realistic or real, but there are a few that seem to genuinely offer what they advertise (just be careful reading exactly *what* those things are, and in what aspect and don't assume, so make sure you fully understand what those are).

Tim...

I believe (read: i could very well be wrong) that many (way above the 3 percent you stated) of rachshack's customers are actually resellers, so they likely do use the allotted BW. They dont charge that much per month because the amunt of customers that they have offsets the amount they have to pay each month for the lines (which the probably own anyway)...

Hi FnArFy,

Regarding your question "how can they not throw in the server"...

In my post I mentioned a co-lo's price for bandwidth for comparison. Basically, my question focuses on the bandwidth component -- for dedicated OR co-lo -- in whatever deal is offered.



Of course, if it's a dedicated server offer a server will be included -- along with a bandwidth allotment.

My point of mentioning the server was to illustrate even more the low price for the bandwidth component included in their offer after taking into consideration the value/cost of the server .vs the "rack rent" per 1U one would pay with a co-lo offering.

Take care,

Louis

I understand ;)

I was just throwing out a possibility for how racksack does it, I really don't know exactly how they do it :)

Well, as far as collocation, I'd prefer that personally, over dedicated. Funny that you can't collocate for that price, don't you think, but they'd rather give you a free system? Not very quality compared to what you can put together. I'd rather buy a server and put it together and collocate it, than get a free dedicated server that's not set up well or has hardware I don't want. That's not for everyone though. Of course, the disadvantage, is that if the hardware fails, it's your system and you pay. Dedicated servers they own, mean they pay to replace it and probably have plenty of extra parts on hand too (*which is a plus to using a general hardware setup that's common to your company*). There's pro's and con's, but the bandwidth (quality/price) is the big issue, and you can't make BW quality or quantity suffer just to get a good price either. It's hard to find a good set up, where you can really and truly run a good web hosting business. Good deals on servers like this, just don't cut it in that regard, but most people don't run that kind of a show.

Hi Tim,

You mentioned:

"It's hard to find a good set up, where you can really and truly run a good web hosting business. Good deals on servers like this, just don't cut it in that regard, but most people don't run that kind of a show."


Could you elaborate, please? Do you mean the you don't think the packages offered cut it in regards to what's needed to do good web hosting? If so, in what way(s)? BW quality? Server characteristics; HDD, Memory, what? Also, in what ways do typical set ups fall short most of the time for web hosting?

Thanks you very much for your reply. I also would prefer a co-lo setup where I could build my own server, test it really well and set it up OS and software wise how I wanted.

Still learning about what a desirable.optimal configuration and setup to do good web hosting would be...so please share your thoughts on that, too if you would!

I really want to learn this kind of stuff really well -- so thank you very much, Tim.

Take care,

Louis

Rackshack is a good choice for hosting.

I know of a few that will be coming out soon. Check around WHT. This is the place to see if a host makes it or breaks it.

Thanks

I agree with what was said. Im absolutely positive that people arent using the bandwidth they provide. Its like buying a car with 500 HorsePower, will you ever need it? No if your the average driver type, but is it cool to have 500 HorsePower. Same rules apply for just about everything, including web hosting. People buy more than they need, but it makes them feel safe just knowing they have the ability to expand.

Originally posted by stlouislouis
Hi Tim,

You mentioned:

"It's hard to find a good set up, where you can really and truly run a good web hosting business. Good deals on servers like this, just don't cut it in that regard, but most people don't run that kind of a show."


Could you elaborate, please? Do you mean the you don't think the packages offered cut it in regards to what's needed to do good web hosting? If so, in what way(s)? BW quality? Server characteristics; HDD, Memory, what? Also, in what ways do typical set ups fall short most of the time for web hosting?

Thanks you very much for your reply. I also would prefer a co-lo setup where I could build my own server, test it really well and set it up OS and software wise how I wanted.

Still learning about what a desirable.optimal configuration and setup to do good web hosting would be...so please share your thoughts on that, too if you would!

I really want to learn this kind of stuff really well -- so thank you very much, Tim.

Take care,

Louis

Hi Louis,

I really don't want anyone to get the wrong idea, so I'll try and generalize it. RS is probably the best bet you'll get for the price. However, they don't exactly use hardware/systems that have the best specs that someone that wants a really stable and really fast system would get. I'm not saying their server's hardware isn't stable, but it's the lower-end compared to other versions and brands. I.e., they don't use the best boards, or one's with the fastest FSB. Same for memory/RAM and CPU. I'm not talking about the brands in regards to those. I'm simply saying, when you can have a 266 MHZ FSB, and you get far less with these systems. They use AMD Duron for example, not an AMD Thunderbird. They use Pentium Celeron's, not P4's (do they?) My facts about that and all their components might not be completely accurate, or accurate at all, but I know they are definitely not building servers with the best motherboard specs, the best CPU specs and the best memory specs. I *personally* don't like Maxtor drives at all, and I know they use those. I would rather pay for a better drive, than have 10 free Maxtor drives, because I know they'll have problems. This is my experience and my view on the drives -- not everyone agrees with me on that. I'm not saying their systems are just crap, but no one will disagree that it's not the top of the line, or even close. That's okay, but the simple fact is, that it makes a large difference in system performance and maybe you will run a web host with clients that this doesn't have any poor effects from, or maybe you will. I'm simply saying, you don't have a choice of saying "I'm not interested in that low-end stuff you sell, and although it works, I'm wanting something more professional", you can't, they don't offer that as an alternative -- that's all I'm saying.

It could be better, but it's not. However, it would be more expensive, they couldn't buy in bulk and so many people having different hardware and brands, could make replacing, trouble shooting and/or familiarity and fast(er) installs a problem. Still, it would be beneficial to offer that. I state this, because although you can run a web host on these systems, they are not al that great hardware-wise. It's the lower-end models. Check the specs on the hardware and compare them with something you'd use if you put a server together and there's a pretty significant difference in performance (but price as well). I don't think they could justify charging $99 a month just for a good server system, let alone give you 400 GIG's of bandwidth, so it's not like it's a horrible or bad deal.

I don't know enough about their BW quality to comment, so I won't even guess it's good or bad or anything about it in that regard. Definitely, if it's decent bandwidth, you're paying 50 cents a GIG, and get a free system, even if it's not the best. Again, not bad. It's just what a lot of people that really want to do this right will not want to use. I know that might offend people, but if any of those people that complain about my comment about that had a choice, you can bet that they would pay another $50 a month for a better quality server (hardware-wise). For anyone to deny they wouldn't, either doesn't understand the hardware issues and isn't knowledgeable enough to make an argument or debate the issue, or they would be lying. I hope that doesn't come off as arrogant. I'm certainly not saying people that use RS are just hobbyists or are clueless newbies -- they'd get a better system if they were able to. I'm simply saying that I personally don't think it would be worth it, knowing how poor my opinion of their choice of server systems is that they rent. Sure, it's not bad with the price, but the price is not the issue, nor is it the basis for my comments you see -- and don't confuse that with me talking down about them. It's simply how I feel and to respond to the question of how they do this and still make money.

As far as their setups, is it my _understanding_ that they have specific install images that they use when they set up a server. I won't get into the details, as it's been discussed previously to death, but it leaves a lot to be desired and would be an addition reason for someone like me to not have interest in their services. I'm not trying to sound overly picky or unreasonable. I'm not, it's simply understanding the ramifications of this and how some of these issues pose considerable differences in the overall quality, and are imposed in such a manner that makes it impossible to change -- I speak of the initial install. They will not, again, as I'm told, do any customized installs. That is fine, but the choice between a poorly designed install/configuration that you can't change much of (i.e., partition schemes), and making simple requests upon ordering and initial install that will make a huge difference for some people that are attentive to such issues.
Still, I'd have some issues with the hardware, but I'd better accept those shortcomings', provided other important aspects get the attention they ought to. They (RS) do not cater to people like myself, is all there is to it, and that's fine. I'm not saying they won't be a decent or good choice, they just are not for me. Provided they did do some simple changes to the initial setup to not leave me stuck with their original install and offered some price to choose some better hardware... well, I might go crazy renting a ton of servers. (Well, also if I didn't have a job doing this and it wasn't a conflict of interests anyway. :-) I hope that makes it more clear. I'm not exactly looking to host with someone either, so I'm just explaining this in a general sense. They seem to do well at whatever it is they are doing, and if it appeals to you, it might be something to look into. Good luck.

Hi Tim,

Thank you very much for replying. I think I understand what you're saying now. Thank you for elaborating; I appreciate it.

I've studied hardware and *nix OSs a bit. So I'm somewhat familiar with the issues involved regarding both various hardware components and software configuration issues.

Would like to build my own server and co-locate it idealy. If you were building a rack mount server for co-lo, and were going to run a web hosting company off of it, what hardware and software configuration would you choose?


Thank you very much for sharing,

Louis

Do a search and you'll find ISP's that sell bandwidth for around 50 cents a gig. Bandwidth is not that expensive. Many are charging more because they bought it when it was higher and are recouping their cost.

Originally posted by FnArFy
Well, here's my input...

If the company own its own lines (DS3, OC48, etc...), they can offer as much BW as they decide... They don't have to pay more for it...


Wrong. Everybody have to pay for the bandwidth.

I'm not saying you're wrong, I really don't know all to much about this, but lets say you're an isp with your own 10GB (yes "GB") connection, do you have to pay for your bandwidth?

Sure, everybody pay for it.

Who do they pay?

Jedito,

I think what FnArFy is trying to say is this:

(example only)
Company A pays $1000/mo for 100Mbps from Cogent Communications,
100Mbps = approximately 30000 GB/mo,
so Company A can offer as much bandwidth with their plans as they like as long as they do not exceed or is within the 30000 GB/mo that they can get out of their 100Mbps line.

a simple calculation based on a $99/mo server:
30000 GB available BW / 400 GB per server = 75 servers
75 servers x $99 = $7425

Company A's cost for 30000 GB/mo is $1000
$7425 - $1000 = $6425
$6425 - (cost of servers, etc etc) = $???
$??? = profit

just my 2 cents...

Originally posted by Neo3Net

Check around WHT. This is the place to see if a host makes it or breaks it.


I don't mean to ruin anyone's view of webhostingtalk, it's a great place, and I've enjoyed being a part of the community here..

BUT wht isn't the only place on the Internet that people go to find webhosts. Nor, does WHT affect all of the companies out there (look at ***** for example..). If this is the place to see if a host makes it or breaks it, then ***** still wouldn't be in business.

Obviously, it is well known HERE, but for the many many consumers out there who are not aware of this site, they look at ***** and others, and don't know a difference.

I know of many successful hosting companies that aren't active on these boards, and aren't mentioned here either. But, for those who are, you are partially correct.. It seems that many hosts here are completely trashed or held in high regards - just by single posts *That is why hosts shoud treat their customers like they would their GRANDMOTHER!* (in most cases)

In reference to the original question at hand, I think most of it has been covered, but I think many small hosting companies are simply not able to afford it if a customer uses all of the transfer, or even half. But that's why you fail to see them stay alive for very long.

Originally posted by FnArFy
Who do they pay?
To the telco.

Originally posted by zenwoo
Jedito,

I think what FnArFy is trying to say is this:

(example only)
Company A pays $1000/mo for 100Mbps from Cogent Communications,
100Mbps = approximately 30000 GB/mo,
so Company A can offer as much bandwidth with their plans as they like as long as they do not exceed or is within the 30000 GB/mo that they can get out of their 100Mbps line.

a simple calculation based on a $99/mo server:
30000 GB available BW / 400 GB per server = 75 servers
75 servers x $99 = $7425

Company A's cost for 30000 GB/mo is $1000
$7425 - $1000 = $6425
$6425 - (cost of servers, etc etc) = $???
$??? = profit

just my 2 cents...

I think that he said that people who have their own NOC doesn't pay bandwidth... anyway, I got the point.
Anyway, I have nothing against RS, but I wont base my bussines model in CogentCo prices.. of Course than Headsurfer should know more about this bussines than I, he's making millons per month, and I dont :)

i don't really think rackshack's business model is based solely around cogent. they do have plenty of other providers.

the majority of their outgoing does go through cogent, but, if you check their network, it is pretty good as far as diversity.

Jedito: What I'm trying to get at is who does the telco pay?

Eventually in all of this someone makes pure profit...

Originally posted by zenwoo
Jedito,

Company A pays $1000/mo for 100Mbps from Cogent Communications,
100Mbps = approximately 30000 GB/mo,
so Company A can offer as much bandwidth with their plans as they like as long as they do not exceed or is within the 30000 GB/mo that they can get out of their 100Mbps line.

a simple calculation based on a $99/mo server:
30000 GB available BW / 400 GB per server = 75 servers
75 servers x $99 = $7425

Company A's cost for 30000 GB/mo is $1000
$7425 - $1000 = $6425
$6425 - (cost of servers, etc etc) = $???
$??? = profit

Somebody with a little time on their hands should run the numbers on RS. <<Just too see how much they oversell by>>

First, Total up their current Bandwidth (Check MRTG Graphs) - Just because it's a GigE line, doesn't mean its Burstable and it certainly doesn't mean they are buying the FULL GiG. Just use the Max available amounts per the MRTG graphs they post.

Second - Determine how much bandwidth they sell (# servers times 400gb) at 6,000 Servers it 2,400,000gb

Third - Determine how much bandwidth they BUY for each server they have and compare it to the 400gb Number.

This model is working for RS and I don't think there is anything wrong with what they are doing. Any particular server can/could use the FULL 400gb, RS doesn't care.

However, If ALL servers needed to use the FULL 400gb, Robert would have a huge lump in the back of his shorts. It would Break their model and their Network. They couldn't handle it, Not even using watered down Cogent bandwidth. The Numbers simply don't work. - Then again, what's the likelyhood this would happen?

The RS model is not that complicated, it's rather simple indeed. The reason most people on WHT hate RS is because they wanta be just like RS and can't figure a way to do it. If you wanta beat RS at their own game, you need to find their weakness (Support) and then beat them using their weaknesses against them!

My 2 cents!

Originally posted by raq4less
However, If ALL servers needed to use the FULL 400gb, Robert would have a huge lump in the back of his shorts.
- Then again, what's the likelyhood this would happen?
Zero. Point is... ?

Originally posted by skylab
i don't really think rackshack's business model is based solely around cogent. they do have plenty of other providers.

the majority of their outgoing does go through cogent, but, if you check their network, it is pretty good as far as diversity. The majority doesn't go through Cogent, only about a third (maybe slightly over), as evidenced by their MRTG graphs. The amount of traffic through Cogent is pretty logical based on the amount of bandwidth they have from each provider.

ah. thank you for correcting me there. it seems their routing has changed slightly since the last time i was paying attention.

i seem to remember a few months the majority of outgoing bandwidth going through cogent.

but yeah. rackshack definitely has a well-built network. are they not in negotiations for another new gig-e line or something like that?

Originally posted by Chicken

Zero. Point is... ?

Exactly my point. Zero!

Re: How can places offer 400-600 GB BW per month for 100-130 dollars?

From reading the replies, one impression I get is that places offering large amounts of bandwidth along with a dedicated server at a low price point are doing so figuring most folks won't ever use all their bandwidth.

But since most folks want the "warm fuzzies" of knowing they have it available if they need it, they play the same game as host who oversell to retail clients...thus giving the market what it wants and is asking for...knowing the market isn't going to use all that much.

Others have made the point that one can buy large amounts of bandwith at low cost...thus even if folks do use all their alloted bandwidth, the business model of lots of bandwidth in a dedicated server offering is still profitable/viable.

Color me confused here...not sure..which is it?

Thanks for sharing,

Louis

Originally posted by FnArFy
Eventually in all of this someone makes pure profit...

One would think that at the end, the bandwith/backbone provider will the one that makes pure profit ... well, in contrary, most backbone (MFN, UU, Yipes, Williams, etc) are all losing money and some even going towards filing Chapter 11 soon.

cheers,
:beer:

Originally posted by FnArFy
Jedito: What I'm trying to get at is who does the telco pay?

Eventually in all of this someone makes pure profit...

They pay their employees and their creditors.

as do web hosts, ur point, they are still making what is the equivalent of pure profit...

i don't really know if there is pure profit anywhere in there. someone had to lay the line and then someone else has to pay to use it. whoever laid the line probably spent a whole lot laying it.

but yeah. i think in the end, someone's making a hell of alot of money....

Originally posted by FnArFy
as do web hosts, ur point, they are still making what is the equivalent of pure profit...

Am I missing something? What's the relationship of a host paying to their employees and the Telcos paying to their?
Are you using Telcos employees? Do you pay to the Telcos to give support to your customers?

Overselling is a conerstone of telecom.....

Dial-up ISPs dont have a modem/phone line for every user...
Hosts/Colos don't have all of the bandwidth needed to support 100% utilization by their users....
Telephone companies don't have one line out of the Central Office for every phone number.....

Bandwidth does cost.... their is no such thing as pure profit. There is maintenance, there are fiber cuts, there electrical costs, employees, etc etc. I'm not quite sure what is meant by "owning their lines" but no backbone provider or node or telco just let's you plug for free.

The idea for any telecom is to sell their capacity..... unused capacity=less profit. Costs do not increase at the same rate as utilization.

One last analogy: I have insurance on my home/car/life/dog..... I pay x dollars for this and if something goes wrong I can make a claim for XXXXXX dollars. If every customer of an insurance company made a claim on their home policy.. guess what? Insurance companies don't and they are not required to have a one-to-one relationship. Telecom will never have a mass marketed one-to-one realtionship either..... it would be too cost prohibitive and they would go out of business becasue NO ONE would buy their stuff.

I highly doubt RackShack is overselling bandwidth. Why? Simply because a 100mbps line can do something like 30 *terabytes* per month. That's roughly 30,000 gigs.

RackShack can easily make a profit with that. So if you were wondering how it works, there you are.

re: 300-600 GB pricing.....

Every component that goes into building a data network is readily available for pennies on the dollar... (failed dot coms, failed hosts)
Datacenters themselves are being sold/liquidated for pennies on the dollar...
Servers and their components are very cheap....

BW providers have very undersold capacity sitting around, so they can make a choice--- 1) do a deal for super cheap bw with some host and make some money on their investment.... or 2) fold thier arms and say no and then make NO money on their investment.

This is just a BIG transfer of wealth.... the new companies whose costs are significantly lower because they bought everything at a bankruptcy auction are elbowing the older companies that had to pay retail for their stuff out of the market. The newer companies continue to increase market share at the expense of the failing older companies.....

Originally posted by Jedito


Am I missing something? What's the relationship of a host paying to their employees and the Telcos paying to their?
Are you using Telcos employees? Do you pay to the Telcos to give support to your customers?

Please remember that I am not speaking on behalf of the company I work for, this is merely discussion...

My point was that host's have to pay employee's and so do telco's, but hosts also have to pay for bandwidth... where is the money that hosts pay for BW going? The telco's aren't actually paying any money for the BANDWIDTH...

Originally posted by FnArFy
The telco's aren't actually paying any money for the BANDWIDTH...

No, but they are paying money to the people who supplied the capital for building their networks in the first place.

Originally posted by Devorius
I highly doubt RackShack is overselling bandwidth. Why? Simply because a 100mbps line can do something like 30 *terabytes* per month. That's roughly 30,000 gigs.

RackShack can easily make a profit with that. So if you were wondering how it works, there you are.

Well they have around 5000 servers right now.... figure 400GB for each and that is 2 Petabytes.... (2,000TB)

So that kinda blows the whole 30TB thing out of the water 'eh?

Ah, I see, good call ;)

Offshoot: Assuming that the company was large enough to fund its own network, do they still pay for BW?

Originally posted by indyjon
Well they have around 5000 servers right now.... figure 400GB for each and that is 2 Petabytes.... (2,000TB)

Judging by their MRTG graphs, they're pushing about 250 TB/month, ie an average of 50GB/month/server.

Originally posted by cperciva


Judging by their MRTG graphs, they're pushing about 250 TB/month, ie an average of 50GB/month/server.

The question was whether they were overselling..... they sell their servers with 400GB..... so yes they are overselling.

As I said earlier, overselling is a cornerstone of anything telecom. Overselling makes it possible for you to have your home phone for around $30/month...... if you bought service that was not oversold you would pay upwards of $500/month for that same home phone.

Originally posted by indyjon


Well they have around 5000 servers right now.... figure 400GB for each and that is 2 Petabytes.... (2,000TB)

So that kinda blows the whole 30TB thing out of the water 'eh?

Let me do the math for you. 5000 at $100/server (they have some that cost quite a bit more than that, so I'm giving a VERY conservative figure) is $500,000 a month coming in. It would take 66 100mbps lines to handle 2,000 petabytes. 66 100mbps lines would cost $198,000. 500,000 - 198,000 = $302,000. Plenty of cash. And as I said, the $100/month servers are just their cheapest. They have others upwards of $300/month, so they could be in the millions of gross profit.

Devorius....

What are you talking about? We are talking about overselling bandwidth..... not how much money they make.

They are overselling and that is a good thing. Thanks for confirming my math though.

As per the "pure prophit" argument. When you buy a car, who do you buy it from? You buy it from the dealer. Who did the dealer buy it from? He bought it from the manufacturer. Who did the manufacturer buy it from? He didn't. Does that mean that the manufacturer is making "pure profit"?
See, bandwidth isn't just something that you pick up off the ground, dust off, and shove into a computer. It's a manufactured commodity (just like a car, sortof). If you trace the revenue stream all the way to the top you find that while the top guys didn't actually pay someone for the bandwidth, they have to pay to implement and maintain the networks that the bandwidth is carried on.
As for whether someone could create their own network if they want, sure they can. Evey cellphone company has created a *psuedo* nationwide network, the phone companies have, backbone providers... It'll only cost you a few billion to implement (random guess, anyone with better numbers pipe up).

The point is that they are likely not overselling. And if they ever needed to add more lines, they could easily cover it. So my post was very on topic.

Originally posted by Devorius
The point is that they are likely not overselling. And if they ever needed to add more lines, they could easily cover it. So my post was very on topic.

But that is just it.... my math (and you confirmed it) says that they are indeed overselling their capacity.... something makes me think that you and I are not talking about the same thing.

What I was saying was: who's to say that they don't have those 66 100mbps lines? Or even a hundred of them? Besides, there are much higher capacity lines that RackShack probably has.

Originally posted by Devorius
What I was saying was: who's to say that they don't have those 66 100mbps lines? Or even a hundred of them?

Uh, Rackshack? They have a network status page up which indicates that they have three GigE connections, an OC3, and a DS3.

Based on their current rate of growth and network utilization, I'd guess that they'll be bringing in another GigE connection sometime around late May - early June.

(Of course, if all their customers were to use their bandwidth allocations, Rackshack would need to get another dozen GigE connections immediately.)

Originally posted by Devorius
What I was saying was: who's to say that they don't have those 66 100mbps lines? Or even a hundred of them? Besides, there are much higher capacity lines that RackShack probably has.

I see ... you were just theorizing.

They actually have 3 gig Es an OC3 (155M) and DS3 (45M)..... so given that info then you can see that they are definately overselling.... and I love it.

Originally posted by cperciva


Uh, Rackshack? They have a network status page up which indicates that they have three GigE connections, an OC3, and a DS3.


Which is why I said there are much higher capacity lines that they probably have. I was only using the 100mbps lines as an example, as someone had mentioned it previously.

Originally posted by Helter
As per the "pure prophit" argument. When you buy a car, who do you buy it from? You buy it from the dealer. Who did the dealer buy it from? He bought it from the manufacturer. Who did the manufacturer buy it from? He didn't. Does that mean that the manufacturer is making "pure profit"?
See, bandwidth isn't just something that you pick up off the ground, dust off, and shove into a computer. It's a manufactured commodity (just like a car, sortof). If you trace the revenue stream all the way to the top you find that while the top guys didn't actually pay someone for the bandwidth, they have to pay to implement and maintain the networks that the bandwidth is carried on.
As for whether someone could create their own network if they want, sure they can. Evey cellphone company has created a *psuedo* nationwide network, the phone companies have, backbone providers... It'll only cost you a few billion to implement (random guess, anyone with better numbers pipe up).

I disagree...

After the initial costs of setting up the network are paid in full, the telco could *concievably* fire all of their employees, and, barring any malfunctions (which are a relatively low cost and only require a few hours of work at menial wages, so barring is not that important) the bandwidth would still come through, and the wires would still work... Am I correct?

Originally posted by FnArFy
I disagree...

Think about what happens when you lease a car. The situation is identical.

thats exactly my point...

after a car is rented a certain amount of times, and has paid for its own wortf, the only costs left are refurbishing, which are relatively small, so almost all of it becomes profit...

Originally posted by chrisb
Do a search and you'll find ISP's that sell bandwidth for around 50 cents a gig. Bandwidth is not that expensive. Many are charging more because they bought it when it was higher and are recouping their cost.

That is just boloni

50c a gig = 150.00 per Mbit .. unless you have Cogent or are a Service Provider using a 300Mbit pipe (where ou get soem serious price break) you can't even buy it at that price on today's market

Originally posted by cperciva


Think about what happens when you lease a car. The situation is identical.

Eh, no. Any car that is used for rental requires large amounts of upkeep, the same goes for large networks and large pipes. **** goes wrong, stuff breaks. Try to imagine for example, the amount of raw equipment and man power that it would take to discover and pinpoint a faulty connection *somewhere* in a nationwide high speed network? That one task alone is huge. Especially when most of the cable is inaccessible? Bottom line, there is no pure profit for anyone. Some people are making a large amount of profit, but it is directly related to the amount of money that they are putting into it. Sure, some people may earn 500 million in profit from their network (again, random number), but they had to drop 100 million to reach that profit (*meaning they took in 600 million gross*).

Originally posted by Helter


Try to imagine for example, the amount of raw equipment and man power that it would take to discover and pinpoint a faulty connection *somewhere* in a nationwide high speed network? That one task alone is huge. Especially when most of the cable is inaccessible?

Would you consider that job huge in relationship to the massive amounts of money required to BUILD the network in hte first place?

I thought not...

Game, set, match.

Of course that's huge.
Because you have to maintain that lines, you can't leave they in their own.
Don't you ever saw this thread saying that, Ex: Nac its doing mainenance of their lines?

BTW, what do you mean with


Game, set, match.
:confused: :eek: