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Old 10-06-2008, 08:15 PM  
Phil21
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Join Date: May 2001
Location: ICQ: 25285313
Posts: 993
Re: the Brad comment.

He's actually more right than you realize. He is talking about something that goes a bit deeper than what appears on the surface, and those in the business know precisely what he is getting at.

Will $6/meg (or less) flat-rate pricing become viable in the future? My take is probably. For this to happen, bandwidth use must increase to offset the per-unit cost decrease. My crystal ball is malfunctioning today, but I do not currently see a stop to the slow decline of bandwidth prices. I do believe there is a floor on the wholesale rates, but I'm not going to peg it at a number. As long as revenues can continue to increase overall (if I can go to Level3 and say "hey, we're paying $100,000 for 10,000mbit right now.. we'd like to increase our spend with you to $200,000 for 40,000mbit" that's in general viewed as a win) you will continue to see the slow downward trend in bandwidth pricing, just as you have over the last 10 years. At some point though, usage is going to start to flatten out, and you will then see a stop to wholesale IP price erosion as there will be no more "winning additional revenue" on the table. I think we're "close" to that floor, but hey - I've been proved wrong before!

Basically, someone coming to me asking to pay $6/mbit @ 95% and 15 servers simply does not interest me. Some hosts may take that business, but it would not be profitable for me to do so. Carefully selected specials can certainly get the per-mbit rate down for select customers, and those customers should absolutely take advantage of that fact. I've probably talked to 25 or so folks since Friday night, and I've actually only offered competitive quotes to perhaps 4 of them. The rest, we simply were not willing to compete on pricing they were seeing from other providers.

For us, the specials listed are carefully crafted promotional specials. They cultivate good word of mouth, as I'd put our support up against anyone out there. Once someone is in the door with us, we generally have them as a client for over 3.5 years (with a few exceptions, where I fully admit we have dropped the ball). Getting people in the door is hard - the sheer number of hosts posting just on GFY should give everyone an idea of that fact. We also, could not survive on *actually* selling $4/mbit like Brad is getting at. For some this is a great deal, for others we won't line up well with their goals.

Brad is a marketing genius in my book, I wish I had 1/10th of his PR and sales skills. While he may be a bit blunt in his comments, and perhaps to an outsider not completely explain what he's really getting at, he is absolutely correct. As I've said many times to many potential clients - folks like him, and a few other hosts here, I absolutely do not mind competing against since I know I'm going up against honest bids. It's the hosts Brad is getting at that are a cancer on this industry offering things they simply cannot sustain. To put blunt words on it - many hosts out there are lying to you about what they provide.

So, in my limited opinion - jump on the specials you are seeing offered soon. Brad isn't completely off his rocker

Back to football for me! Go Vikes!
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