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06-21-2009, 04:26 PM #1Web Hosting Guru
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Why is there such huge disparity in bandwidth price?
I've seen colocation bandwidth prices vary from under $4/mbps to $50 or even $100/mbps.
Why such huge disparity? Are the $100/mbps bandwidth really any better than the $4 one?
What do I need to pay attention to when choosing a vendor?
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06-21-2009, 04:37 PM #2Rockin' the beer gut
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Location location location. A premium blend of BW on Wall Street will cost you more than a premium blend in Kansas City.
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06-21-2009, 04:53 PM #3WHT Addict
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location location location, quantity, quantity, quantity.
Here in Northern VA, right outside of DC bandwidth is expensive... but if you're using a ton of it, it gets really cheap (as I assume is the case everywhere).
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06-21-2009, 07:23 PM #4Web Hosting Master
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i live in NYC and the pricing is crazy here, even though I want to colocate some servers, I can't because of pricing - as other's have said, it's all about the location - if business is booming, the price will remain high, such as Manhattan
but if you were to get a colocation spot in lets say in the outskirts of Georgia then you're less likely to pay a price even close to the ones in Manhattan.
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06-22-2009, 09:34 AM #5WHT Addict
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The location issue is key, but it comes down to supporting infrastructure more than anything else.
As an isolated data center our pricing will always be a bit above the coasts or major metro ares because the infrastructure to support huge pipes isn't here. When we stared doing colo 10+ years ago a DS3 was a huge huge deal... since then we've had at least 2 other occasions where we had to delay our bandwidth plans because the telcos/providers just didn't have what they needed to bring in anything else.
So if your DC sits on top of a fiber ring and there's a ton of excess capacity then chances are it's going to be cheap. If they're the only kid on the block using bandwidth then it's going to be much higher.Isaac Helgens
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06-22-2009, 11:48 AM #6Web Hosting Evangelist
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The pricing completely depends on the location and how much bandwidth they are actually buying.
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06-22-2009, 04:55 PM #7Backup Guru
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06-22-2009, 05:03 PM #8Web Hosting Master
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06-22-2009, 05:20 PM #9Web Hosting Guru
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06-22-2009, 05:28 PM #10Backup Guru
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Scott Burns, President
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06-22-2009, 05:30 PM #11Web Hosting Master
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06-22-2009, 05:51 PM #12Backup Guru
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Part of the problem is that many companies simply don't want to bother with small customers. If you look around in the right places, you may find something more suitable for your needs.
One good example is Atlantic Metro. Their price for 1U colo with 10Mbps of bandwidth is hard to beat in NYC:
http://www.atlanticmetro.net/colocationScott Burns, President
BQ Internet Corporation
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06-22-2009, 10:30 PM #13Rockin' the beer gut
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06-22-2009, 10:45 PM #14Web Hosting Master
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ah, that's cool. but after seeing the pricing trend when i was looking into it, I had to stop because most of them were out of my budget, I just went on researching regular dedicateds instead, saved me time.
but over the summer I'll most likely do further research on different DCs in the area and since I have a car now, I can actually go from place to place unlike last year and check things out
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06-23-2009, 12:32 AM #15Web Hosting Master
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Pricing can often vary significantly based on the size of the provider and how much risk they can take on.
A "problem" with 95th %ile billing is that it's easily possible for a provider to take in much less than they are spending. You can't simply take the cost you are paying for bandwidth add in markup and resell it and expect to make a profit.Daved @ Lightwave Networking, LLC.
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06-23-2009, 09:48 AM #16Web Hosting Master
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Wow I remember those days boasting of having 2 X DS3's and an OC3....
Back to the OP,
The location, cost to the company for the backhaul, overall network routing equipment, cost of the providers themselves, and don't forget, the DC needs to make money somewhere too. Everything has a capacity remember, whether it's space, power, cooling or network before you either reach max capacity or have to invest in building out infrastructure. Some of the NY colo facilities are maxed out in terms of resources (no more power) and so as space opens up they're only going to sell at the highest rates possible to take in as much revenue as they can. Obviously this happens or could happen anywhere. Research what aside from the BW pricing you're getting for your $ and pick the one that fits you best.
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06-23-2009, 12:25 PM #17Web Hosting Guru
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PhMatt is right, bandwidth isn't the only thing you'll spend money on in a data center. Always look at your total cost of ownership.
In my experience, a lot of customers overestimate the amount of bandwidth they will need and some DCs take advantage of this by either over selling bandwidth or offering super cheap bandwidth. It attracts attention and brings customers in. If the data center isn't making money on bandwidth, you can bet they're making it somewhere else (not that that's necessarily bad, DCs need to make money).
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06-23-2009, 12:33 PM #18
Absolutely - it's always about total cost of ownership. The differences in combinations of bandwidth, rack pricing and power costs can be significant.
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06-23-2009, 11:42 PM #19Web Hosting Guru
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I agree it's about the TCO.
But while bandwidth prices can vary by 20X or more, prices for rack space and power don't vary nearly as much.
When 1 company is 20 times more expensive in bandwidth, it's pretty much impossible to make up that difference no matter how inexpensive its rack space and power are.
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06-25-2009, 02:16 AM #20Web Hosting Master
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Well here in midwest, it seems its totally opposite, colo's are more interested in selling power rather than bandwidth.
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06-26-2009, 09:43 PM #21Aspiring Evangelist
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Each business has a given set of expenses. For specifically bandwidth.. you have router costs, Point to point costs, Costs of IP provided from the carrier backbone. Costs of any redundancy that they provide. Some carriers attempt to compete by lowering the price of their product below a reasonable rate based on actual costs. Some are more reasonable with their cost projections, and some charge based on their "Name Value". There is a broad range of costs out there. Most of the them lately are reasonable based on costs.
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06-27-2009, 02:22 AM #22WHT Addict
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If I have a 10Gb circuit at Qwest and use all of it or none of it, it does not make a different to them. They do not make more or less money .. they are tier1 and they have way too much dark fiber to expand with. What I am using, though, is thousands of dollars worth of ports and 10gbps throughput of their hardware must be dedicated to me.
So my point is this.. bandwidth has fallen in price because hardware is less expensive and consumption of bandwidth is greater. 30mbps 10 years ago was a lot of traffic -- you were a big baller in the internet game. So to pay $5000 a month was pretty cheap. Now the same operation is maybe doing 1000mbps and is paying $5000.
Why do some places charge $100/mbps? because people will pay it. Usually it is because, like someone said, they dont want to deal with retail. if you want 1/2 rack, some power, and bandwidth they want at least $1000-1500/mo, so they pad it all in the bandwidth.. 5 mbps @ 100/ea
but their cost is only a few dollars if they are tier2 or tier3 ... tier1 would be more expensive only in that they dont use $300 switches like some of these $3/mbps people. they still spend $300 per port on monster routers. so they are never going to sell to you 5mbps @ 5 in a major datacenter where they have a POP.. they wont recover the port charges for a long time
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06-27-2009, 04:43 AM #23Web Hosting Master
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The prices vary depending on which carrier, location, the commitment the datacenter has and other costs involved in getting the bandwidth into the DC, as the upstream may not have a POP in their facility.
Generally if a US datacenter charge a bomb (>$50), I advise you to look for a better alternative, as it is pretty ridiculous to charge so many times more than the actual prices the had from their upstream.
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