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Thread: Bandwidth

  1. #1
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    Bandwidth

    Could someone help me understand bandwidth when you deal with colo hosting? Currently I have VPS's and I am used to "you have 1000GB bandwidth" and thats what I have. but looking into colo its dealing with megs and mb/sec and I'm trying to get it straitened out.

    I currently use about 500GB bandwidth for my webserver. Would this mean I need 2mbps since from what I have read 1mbps = around 316GB?

    Also if this is the case how do companies make money offering 1000GB bandwidth with dedicated servers if the cheapest bandwidth I can find is $35-45/meg.

    How is the company I am currently with making money off of me if they are paying $70-90/month in bandwidth for my usage and I am only paying $70 to them.


    I bought 5 IBM x330's with various specs that I am looking to host colo in the seattle area and continue selling webhosting and advance into selling gameservers and eventually VPS/Dedicateds, but I keep running into how can I make money with the bandwidth costs?

    Any help would be great.

  2. #2
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    It can be had for much less than $35-$45 per meg. Look here in this thread for an easy example. El cheapo cogent advertises $4/mb on their web page here. Uberbandwidth does $4/mb here. They even have a colo special with 100mb and full rack on that page. Basically you need to be able to buy in large enough amounts where you can resell in smaller amounts with a mark up and you make money .

  3. #3
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    brianbak:

    (1) The first thing you need to understand is that dedicated vs co location are based on two entirely different models. That is in the case, of dedicated server providers, there is usually a one time cost for the hardware (NRC-CAPEX) and ongoing costs for things like power, bandwidth, cooling etc (MRC-OPERATING-COSTS). Portions of the dedicated server market are racing to the bottom of the price spectrum while others are moving back into the high-end of the pricing spectrum. Therefore, at the end of the day it's a numbers game where the costs are understood and distributed across the user base. Furthermore, because most people over-estimate the amount of bandwidth they will need or use you end up with a situation where 80% of your customer-base is subsidizing the 20% who consume the majority of the resources which explains how your provider can make money off of your server rental.

    (2) Co location is different in that resources are dedicated. The cost of power and bandwidth which are normally distributed across the user base are now dedicated and these things are reflected in the costs. On thing that is confusing to someone such as yourself looking at it from the outside is how can dedicated server providers offer such much and not go broke? Let's go back to the numbers if your average dedicated server price $150/month:

    $150/month @ 2000 production units = $30,000 revenue (let's assume your total capacity is higher but these are just units you have rented out.)

    Depending on your situation you can probably get 2Gbit/s of transit (2 x 1Gbit/s) for around $16,000/month. Which gives you about 600TB+ to distribute among your production servers. You can give everyone a maximum of 3TB or less of transit (most people 80% of them will use 500GB-1000GB of those allocations.) Therefore, you create different packages and charge more for people who think they need allocations in the 3TB range about $200-250/month. (most of them will use about half the allocation.) with the different package configurations you've just boosted your revenues to $250,000/month range!

    Power and cooling will run you about $22,000-$25,000/month

    Therefore, your costs would look like so if your dedicated server provider:

    Monthly Revenue: 1000 @ $150/month = $150,000 (1TB)
    Monthly Revenue: 600 @ $200/month = $120,000 (2TB)
    Monthly Revenue: 400 @ $250/month = $100,000 (3TB)
    ==========================================================
    Total Monthly Revenue $370,000
    Total Monthly Communication -$ 16,000
    Total Power + Cooling -$ 25,000
    ==========================================================
    $329,000
    -Facilities
    -Staff
    -Software licensing (if any)
    -(Misc Operating Costs)
    +Profit

    Hope this helps to clarify.
    Lee Evans, Owner/Operator
    LeeWare Development
    Linux Dedicated Server Grids
    http://www.leeware.com

  4. #4
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    Thanks for taking the time here to help me out. Those numbers look great if I had 400 servers I am looking to be starting with a half rack and starting with 5 servers. How can I talk with datacenters that are sending me quotes at $35-45/meg. If I could get it for $4-6/meg I would have no problem. Do I need to keep looking for a different datacenter or is there something specific I should look for?

  5. #5
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    When your looking at small rack kind of space its possible to get it for about $10mbps if you hunt around, your not really going to find much better than that in my experience. You have to remember the data centre are making the money by selling bandwidth at a higher cost.
    - Buying up websites, side-projects and companies - PM Me! -

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    Very interesting thread and a valuable post by Lee Evans. Cheers.

  7. #7
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    $10 a Meg and a good rack cost would have me booked. Any suggestions for Seattle area or near by?

  8. #8
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    Possibly Swift Communications? www.swiftco.com... they seem to have decent rates.
    Jon Stephenson

  9. #9
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    Quote Originally Posted by brianbak View Post
    Could someone help me understand bandwidth when you deal with colo hosting? Currently I have VPS's and I am used to "you have 1000GB bandwidth" and thats what I have. but looking into colo its dealing with megs and mb/sec and I'm trying to get it straitened out.

    I currently use about 500GB bandwidth for my webserver. Would this mean I need 2mbps since from what I have read 1mbps = around 316GB?

    Also if this is the case how do companies make money offering 1000GB bandwidth with dedicated servers if the cheapest bandwidth I can find is $35-45/meg.

    How is the company I am currently with making money off of me if they are paying $70-90/month in bandwidth for my usage and I am only paying $70 to them.


    I bought 5 IBM x330's with various specs that I am looking to host colo in the seattle area and continue selling webhosting and advance into selling gameservers and eventually VPS/Dedicateds, but I keep running into how can I make money with the bandwidth costs?

    Any help would be great.
    If you ever colo down in Dallas or Atlanta, it's dirt cheap.


    For example, GNAX has a L(3) & nLayer mix for $8/Mbps. That's ~$24 per/TB

    I don't know of any seattle colocation facilities, I bet you could find cheap bandwidth in Seattle. Like the others said, UberBandwidth(Netriplex) has $3.99/Mbps with a minimum commit of 10Mbps.

  10. #10
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    Quote Originally Posted by brianbak View Post
    Thanks for taking the time here to help me out. Those numbers look great if I had 400 servers I am looking to be starting with a half rack and starting with 5 servers. How can I talk with datacenters that are sending me quotes at $35-45/meg. If I could get it for $4-6/meg I would have no problem. Do I need to keep looking for a different datacenter or is there something specific I should look for?
    (1) I think the problem with the $4-6/meg pricing is that it is largely based on TCV (Total Contract Value) in other words is for people who are going to spend $40,000 per month for a 10Gbit/s or $5,000-$10,000/month for GigE connections. This alone should make it clear that these products are clearly targeted towards larger operations and people with deep pockets. However, these numbers are not bad when you consider that it was and probably still not that uncommon to be quoted 1999-2000 year pricing on such connections which would put in on the line for $100,000/month or more especially when it is ATM-based.

    (2) In terms of pricing those costs seem pretty standard. In terms of recommendations you might want to try FDCServers (http://www.fdcservers.net/Services/C...eredColocation)
    They have really good pricing on bandwidth for colo. (http://www.fdcservers.net/Services/C...eredColocation)


    <Sorry about my recommendation because I think you were looking for something in a specific area and I don't think that FDC has facilities where you are looking but they would come close to your price requirements.>
    Hope this helps.
    Last edited by leeware; 07-12-2009 at 02:36 PM. Reason: Additional Clarifications
    Lee Evans, Owner/Operator
    LeeWare Development
    Linux Dedicated Server Grids
    http://www.leeware.com

  11. #11
    I'll tell you what, in the coming months you're going to see a shift in pricing importance when it comes to colocation. From a Bandwidth driven model to a Power driven model. I know in Atlanta, you can get a half a rack, (1) 20amp drop for $750/mo and bandwidth costs from $5 to $8 per meg.

  12. #12
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    Quote Originally Posted by Hesser View Post
    I'll tell you what, in the coming months you're going to see a shift in pricing importance when it comes to colocation. From a Bandwidth driven model to a Power driven model. I know in Atlanta, you can get a half a rack, (1) 20amp drop for $750/mo and bandwidth costs from $5 to $8 per meg.
    I've seen Atlanta cheaper than that... like $600 for a full 42U cab with 1x20A at 110V
    Jon Stephenson

  13. #13
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    Quote Originally Posted by Hesser View Post
    I'll tell you what, in the coming months you're going to see a shift in pricing importance when it comes to colocation. From a Bandwidth driven model to a Power driven model. I know in Atlanta, you can get a half a rack, (1) 20amp drop for $750/mo and bandwidth costs from $5 to $8 per meg.
    to expand on your point, I believe you'll also see a shift on how power is priced. I've stopped quoting customers power "per amp" and started quoting it "per Killowatt" since that's how I'm charged for it. This also helps standardize pricing across voltages. I've seen other DCs doing this as well.
    Aaron Wendel
    Wholesale Internet, Inc. - http://www.wholesaleinternet.net
    Kansas City Internet eXchange - http://www.kcix.net

  14. #14
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    Thanks everyone for the help. Especially Compusite for the swiftco recomendation, thier sales have been great with working with me and looks like I will be moving in with them very soon
    Leeware, thanks for the broaden scope, helps me set together a future plan.
    Thanks All.

  15. #15
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    Quote Originally Posted by Hesser View Post
    I'll tell you what, in the coming months you're going to see a shift in pricing importance when it comes to colocation. From a Bandwidth driven model to a Power driven model. I know in Atlanta, you can get a half a rack, (1) 20amp drop for $750/mo and bandwidth costs from $5 to $8 per meg.

    Its already like that. Been that way for some time. You can get bandwidth from a number of carriers in atl at most facilities so that is usually a seperate issue.
    Dedicated Servers
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    Quote Originally Posted by WII-Aaron View Post
    I've stopped quoting customers power "per amp" and started quoting it "per Killowatt" since that's how I'm charged for it. This also helps standardize pricing across voltages. I've seen other DCs doing this as well.
    To take that one step further, charge "per KW delivered" (e.g. 16 amp 240 volt circuit = 3.84 kw delivered to the customer) and also charge per KW/hr used by the colo customer. This would reflect that the colo experiences costs sizing the UPS, generator and the utility demand charge (& PDU in US) based on the size and number of delivered branch power circuits; and the colo also experiences a per-KW/hr usage charge (and associated cooling energy charge).

    If you want to get crazy, give discounts per degree rise in the return air temp from the customer's cabinet or room; and discounts for customers who can take 28 degree C intake air. Colo customers with poor airflow, no blanking or 22 C intake air would get no discount.
    Last edited by speedcolo; 07-13-2009 at 11:37 PM.

  17. #17
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    The per-kWh model is already being in the tests by CRGWest on all their facilities except One Wilshire. Looks like its promising, you pay for what you use, it is very fair.

    And for more than X amps per sqft, they charge you an extra for cooling expenses. So, that other problem would be solved.

  18. #18
    Quote Originally Posted by iptelligent View Post
    The per-kWh model is already being in the tests by CRGWest on all their facilities except One Wilshire. Looks like its promising, you pay for what you use, it is very fair..
    And that way when the power goes out, you automatically get "credit" and don't have to pay for it

  19. #19
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    Quote Originally Posted by speedcolo View Post
    To take that one step further, charge "per KW delivered" (e.g. 16 amp 240 volt circuit = 3.84 kw delivered to the customer) and also charge per KW/hr used by the colo customer. This would reflect that the colo experiences costs sizing the UPS, generator and the utility demand charge (& PDU in US) based on the size and number of delivered branch power circuits; and the colo also experiences a per-KW/hr usage charge (and associated cooling energy charge).

    If you want to get crazy, give discounts per degree rise in the return air temp from the customer's cabinet or room; and discounts for customers who can take 28 degree C intake air. Colo customers with poor airflow, no blanking or 22 C intake air would get no discount.
    that is a good idea - we do this for larger customers in atlanta and it works very well. The only issue with doing this for smaller customers is that it can get kind of crazy on the reporting because you will have automate every branch circuit with a meter which is expensive. The larger customers - 100kw and up dont care because it is a small expense overall for them.
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  20. #20
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    btw - almost forgot: your idea of charging an overage fee for power in a sq foot over a certain allocation is also good in that it allows you to accomodate for users that want to pack the cabinet and blad chasis that produce rediculous amounts of heat - that was you are able to recapture the cooling cost associated with that equipment.
    we do this as well and it works very well.
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