MY RANT!! Cogent Bandwidth and Hosting Economics.
 

This shit cracks me up. Below is my hosting rant... If you host on a server with Cogent bandwidth you might learn something about economics and the proponderance of false advertising in the hosting business if you read this.

There is good and bad in everything - there are good hosts, there are bad hosts. Sure, sometimes shit happens to good hosts. Bad hosts have shit happening all the time. This is not directed at any one company in particular.

You usually get what you pay for. All of the large affiliate programs use bandwidth provided by companies like Level 3, Verio and the like. There is a reason for that, it's better bandwidth. They also pay more for management and hardware. Why? All that stuff costs moola. If all you're doing is TGPs then I suppose Cogent bandwidth is fine with triple the latency, just hope they don't go out of business or you're fucked.

A lot of hosting companies advertise falsely all the time. You're never going to see your server - you don't know what the fuck you're hosted on. So, if you're paying $200 per month and your host is telling you that you're hosted on a dual processing server with 1 gig of ram and SCSI hard drives he's probably a lying motherfucker.

To add insult to injury, many hosts that advertise redundant bandwidth don't have it. Take, for example, anyone that sells Cogent. There is not a single company selling Cogent represented here on GFY that has 1000mbits from Cogent and 1000mbits from a Verio or Level 3 as a backup. I bet there isn't even one that has 100mbit from each of two providers. The reason is simple: 100mbit from Cogent is $3000, 10mbit from a Verio or Level 3 is $3000. DO THE MATH. You can't sell bandwidth for .50 or even 1.00 per gig if you have to pay both providers - the cheap one as primary and the expensive for backup.

Of course dedicated hosting is optimal. However, based on sheer numbers I'd bet most people in the adult business are doing virtual hosting. It's easy to tell someone to do dedicated hosting but if they're building their business chances are virtual hosting is the better value. Just because dedicated is 'cooler' then virtual doesn't excuse hosts that sell virtual hosting to unsuspecting webmasters and deliver shoddy performance. Here too, you get what you pay for. If you're paying $50 per month for 100 gigs you're bound to have a bad experience. Can virtual hosting be a great option? Absolutely!!

Again, do the math. If 100mbit from Cogent costs $3000 and the host is selling for .50 per gig he's got a theoretical 30,000 outbound gigs that he can sell (assuming 10% of the traffic is inbound). If a host sold all 30,000 gigs at .50 each he'd gross $15,000. That, minus his hard costs of $3000 for his 100mbit from Cogent and approximately $700 for a full cabinet (because you have to pay for space in a colo facility)... EXCEPT, you can't sell 'ALL' of your available bandwidth or you have a bunch of pissed off customers. Why? Well, anyone hosting that doesn't use MRTG graphs doesn't realize that your peak bandwidth utilization is upwards of twice your average. What does this all mean? If you sell 50mbit of bandwidth you better have a 100mbit pipe so that you can accomodate your customers peaks and valleys without losing packets and network performance. When a network tops out, everything gets delayed.

And where are we now? Well, if you have a host with a 100mbit pipe from Cogent he's paying $3000 for that and if he uses one cabinet in the facility (space for 40 1U servers) add about $700 in rent (average). He can only sell 50% for great performance or maybe as high as 70% if he's lucky. Here's the math at a 50% sell through: $7500 - $3000 - $700 = $3800/month as a gross profit. If he's selling you dedicated hosting, he's got margin on the server rent and management. If he's selling you virtual hosting, those hardware and management costs are straight up out of his bottom line.

So what can you possibly get for .50 per gig? Well, if you're virtual hosting you're going to be on a shit box that's overloaded. In general you're going to be lucky if your host has expensive routers, switches and hubs. You're also going to be lucky if you're in a proper hosting facility with 24-7 security, proper fire supressiom, raised flooring, proper HVAC and redundant power to the facility. Oh, and speaking of hardware, you're going to be lucky if your server is actually plugged into a UPS. What can you expect from this hypothetical host in terms of support? Well, if his best case gross-net is $3800 per month... YOU CAN'T HIRE A NETWORK ENGINEER FOR $35,000 PER YEAR, LET ALONE 3 OF THEM FOR 24 HOUR SUPPORT. Chances are there are no employees, just contractors and friends that do favors. If the server 'rent' and 'management' fees aren't very high then you're really playing russian roulette. If they're low do the math - price out your server as they have it spec'd. Example? $300 per month for a server = $3600 per year. A dual processing server with dual IDE drives and 1 gig of ram is at about $2000 if it's a name brand server like a Dell or Compaq. If it was built by the host, who the fuck would want that? Shitty hardware is another discussion so go fuck yourself tightass. So, this host has $1600 per year in gross profit on your account, or $133 per month to pay for installation, maintenance, upgrades and network emergencies.

That's some real hypothetical math... However, I'm sure there are alot of experienced hosts out there that would agree I'm not too far off the mark for this size hosting operation. What's my point to all of this? Well, currently many of you are enjoying cheap bandwidth and I think that's great. You better hope that the companies out there selling the pipe don't go out of business because you'll be back to paying $2-$3 per gig. Cogent isn't profitable and since they're undercutting all the Tier 1 providers nobody wants to give them peering arrangements anymore. What else? I find that most hosts selling shitty bandwidth also have a shitty network infrastructure, crappy hardware and false advertising about redundant bandwidth.

So, good luck to all of you! In as much as you all BITCH and MOAN on this board about paying NOTHING for hosting most of the guys making bank are paying good money to their hosts. Is that a coincidence? You be the judge. I laugh every time I see someone on here making fun of a host for charging more than $2 per gig. You get what you pay for.

The differences between cheap and expensive hosting is generally not like going to the grocery store and getting Frosted Mini Wheats versus the Generic brand. We all know those two cereals are made in the same factory... but the difference between cheap ass hosting and average hosting prices are typically indicative of two entirely different product and service offerings.

Why is it so important that something like Cogent stay in business? Well, if they don't virtually all of you big TGP posters would be hard pressed to make a nice profit. Conversions are shit and you need to give away a gigs just to get a sale. If you had to pay an aggregate of $5-6 per gig (includes: bandwidth, hardware, management) you'd at least be a lot less profitable.

In closing, just because you need cheap hosting to make your business model work and accept compromises on the quality and performance of your hosting - that doesn't mean the rest of us are in the same boat. When you run paysites, an affiliate program, a search engine, or any site that gets bookmark traffic you need to spoil your surfers with good performance... that costs money.

I can't wait to see all the disgruntled replies. Show me the money! Point out to me all the big companies that use Cogent bandwidth. Of all the people that exhibit at the Internext shows, whose products are hosted on this bandwidth? Live Feeds? Content Plug-Ins? Pay Sites? Guess what, they're all paying more for hosting then .50-1.00 per gig and you probably couldn't switch them over if you begged them. Does this cheap hosting work for alot of you? Absolutely! And, I hope it continues to go well. I just thought I'd enlighten a few of you about the REAL world of hosting economics. Perhaps you'll have a few new questions to ask next time you're shopping for a host.

:2 cents:
:glugglug
:Graucho

Cheers!

Brad

check it out! Brad's goin' off!!! :thumbsup

Can you post some graphs to go along with all of that text.

Thanks.

Amp - I was DUE for a good rant!! :)

Mr. Fiction - are you serious? I got pics...! How much are you going to make this month on Phone Sex with SinTalk...? :Graucho

Brad

wow, I exually learned something, thx buddy.

nice post

:thumbsup

Flying Iguana - I should note that your host has good bandwidth, hardware and real network professionals :) Like Whoa is quality!

Brad

Well that was very well written. Basically it is right on the money.

No shit me too :)

It puts things into perspective.
I at this point am paying more for my hosting than I was before but I have had virtually no problems...so it's paying off.

True dat.

The part that rang truest was about the actual servers rented to virtual accounts. I was with this one guy who went on and on about his ping time, yet his box couldn't deliver pages any faster than a fucking fax machine.

i've been pretty impressed with likewhoa :)

i just did tracert's to most of the hosts offering bandwidth for around a buck a gig. almost everyone of them uses cogent. guess it would be mass confusion if cogent went bankrupt. tgp scripts would be blacklisting half their submitters. free hosting companies that are still around would have a shitload of ppl joining.

Jesus Christ Brad. I like the way you put the little "2 cents" at the bottom. Just a tad more than 2 don't you think?!

But yes, a good read. Very informative.

more like $2 bucks...... :winkwink:

:1orglaugh

I wonder if he used a word processor before posting that. Very nice paragraphs. Nice formatting.

palm.com only has a single OC12 verio line.

:winkwink:

I would just like to add what you said is not always true... we don't buy one megabit of cogent bandwidth, and i think my prices speak for themselves.

When you have your own network, but large amounts from tier1 providers, you can afford to sell for low rates, and still offer the best 24 hour support. Its all these hosts that are reselling someone elses bandwidth, who resell someone elses bandwidth, who don't have any of their own facilities, who don't have any real control over their pricing.

There is no point in using cogent in my opinion, the money you save is just not worth it..

Very good post.
I have been telling this to friends for months now.

It seems they arent really listening.
Ive provided access to alternatives before its too late and I just dont get why they still do what they do.

And about cogent just plain old shutting down?
Ive said that as well.

The Financals just dont look very good.

Getting fucked is something that should be avoided not encouraged.

ive consulted webmasters before about this, and i dont mind doing it again. Ive always been one to say you get what you pay for, and if its too good to be true it usually is.

Do your homework people. Just dont jump into something.

If ya need a hook up or reconmendation hit me up.
Un biased opinons here. There are a lot of good companies out there. And not all of em are expensive.

66883099

Great post :)

One thing you should remember - Cogent is backed by Cisco. Its unlikely that they'll go out of business anytime soon, Cisco is not stupid. :)

You where NOT me :321GFY I bet you wish though :thumbsup

Snarfs - Nah, my rant was free-form... that's just how I type ;)

ProgGod - I'm not suggesting that hosting companies selling Tier 1 bandwidth can't sell for discount prices. I do all the things you do to achieve my lower cost structure. Pricing to the hosting customer is just another business decision. High price for low volume, low price for high volume.

Rage - Cogent IS backed by Cisco, you're right. However, you should follow my logic. Cisco backs Cogent so they can sell more hardware and grow the marketplace. There is currently a huge surplus of bandwidth. By in large, the hosting marketplace is a shrinking and consolidating one. At the most, you have some customers moving from other providers to Cogent. Look at Cisco's stock prices... If customers are merely moving around, there's a zero net gain for Cisco in hardware sales. Besides, what the hell are the chances that these Cogent resellers are purchasing ANY Cisco gear? :1orglaugh At the end of the day Cogent needs to be able to make money on it's own without capital infusions. We've all seen that the marketplace of investors has changed since the bottom fell out of the stock market. People expect companies to make money now. Ultimately, if Cogent can't deliver to investors they'll have to close their doors. Their business model is weak - did you know that several similar companies like Cogent have already gone out of business?

Brad

You can say the same about just about any tech company right now - the economy, especially the tech industry, has been very bad. Tons of companies have gone out of business, and I'm sure many like Cogent have as well, like you said. The difference is that Cogent has the financial backing of Cisco to get them through the rough times and onto greener days.

The market is going back up, and the tech companies that survived will be making money again.

Hey, if Cogent went out of business, I'm sure we'd all eventually benefit in the hosting industry - prices would go back up to "normal" levels and maybe we'd all be making more money. I just don't see it happening any time soon.

By the way, you did hear the news about Verio laying off hundreds of employees and closing many of their data centers about 3 months ago, right? :thumbsup

Hey Sin -

I usually couldn?t be baited into these topics, but wanted to chime in on this one and agree with your position on this.

Please see my rant of two weeks ago on the same topic.

http://www.gofuckyourself.com/showth...threadid=59228

As for most hosting providers lying about the hardware they put customers on, I can see where some could draw such a conclusion seeing they lack direct contact with the hardware, however, a blanket statement like that is a little unfair to those who run quality hosting companies, and pay out the ass for quality gear. You know who we are... we are the ones usually getting bitched at for our prices being too high.. LOL

Contrary to some beliefs, we are not all scum bag, penny pinching, lying cheating assholes.. however, just like any industry.. a few of those types do exist and give the rest of us bad raps.

Best,

Ray
XFR Networks Corp
http://www.xfr.com

SOME folks shouldn't be legally allowed to type CEO all at once. :1orglaugh

Wouldn't hold your breath on Cogent closing down anytime soon.

Long live Cogent!

Well if Cogent dies and your in a Colo hotel your fine. They have a full menu of carriers to choose from and just do a cross connect. Cogent might last 6 months of 2 years or more. Stop guessing who will die next since most telecoms are loosing money

There are also commands that you can use in telnet to see exactly what kind of hardware your machine is built of.

dmesg

Got a few questions. :)

Did Cogent build their own infrastructure from the ground up? If so, how much did it cost and how long did it take?

nice post. well written and on the money.

As your granddaddy told you years ago. You get what you pay for!


Good job brad.

hnmm

Nice !!!

:thumbsup

I enjoyed the "article" very much, every point backed up by facts and numbers.
I WAS LOOKING FOR A BIBLIOGRAPHY.:Graucho

I GIVE IT AN A-

From my understanding, no.

Cogent has leased dark fiber from others for there national network. Yipes who had (just filed chapter 11) a much better Gig e network of there own, built there own.

but dont quote me on it...

And I agree with Brad on Cisco involvement, they have there own investors to answer to, they arent going to keep afloat a network that wont contintue to buy large volumes of hardware from them.

I think cogent is great for TGP galleries and cj's ect.., and hopefully they can become profitable, but it doesnt look good. I just wouldnt throw any site that is important on it, particularly if you care about any traffic outside of north America...

THANK YOU!!! I have found myself in the last few days having to look for another host and I have looked at these cogent things, I was being told that it was bad hosting, but until now no one offered ALOT of information about this type of hosting, so I for one, amd very happy to finally see a good explanation that I can understand. LOL

Thanks so much for making this clear enough where evn us non-techie types can understand it........ LUCKILY I didn't go for that type of hosting in the end or I would be worried now. :)

:thumbsup

Ray (XFR) - you must be one of the good guys. Just last night one of your clients was ranting and raving about how much he loved your service. Said he was on a company using Cogent bandwidth and 'was down more then he was up'!

Tam - Hey, if you'd like a quality dedicated server for a great price give me a call or send an E-mail :)

Brad

Only wanabe's use crappy bandwidth for TGP galleries. Good luck gettign a reputable TGP to post a gallery on an unreliable host - maybe once or twice but if it fucks up your name is mud with them and you won't post again. Most TGPs use PRICY RELIABLE QUALITY hosting for their own sites and expect gallery makers to do the same.
I use Flying Croc - not the cheapest by any stretch but they are NEVER down and service is INCREDIBLE.

You get what you pay for. Period.

SinEmpire, I'd just like to mention that I do indeed host my virtual clients on a dual cpu server with 2 gigs of ram, and two SCSI drives in RAID 1 config. :) I know you weren't trying to generalize, just thought I'd say that there actually are people who are honest in their dealings. :)

Cheers,
Matt

Obviously you did not read, and most likely do not understand basic economics. Sit back and enjoy the next few months with you marginal at best cogent bandwidth. Then lets have this topic brought back up...:1orglaugh

Like SleazyDream also stated, you do not and will not see any of the Real players even considering cogent ever. None of the big paysites or tgp's or any of the real Hosts Like Candid, Techie Media, SinEmpire etc... will never touch that crap..why?? because they know better:)

Look for now if your a gallery maker, and are happy with that, and only make enough to buy beer and smokes, then cogent is good for you. It will save you a few bucks for a little while longer. But thats about it. :2 cents:

Let me tell you its not IF cogent will go out of business its WHEN they will go out of business. Cisco right now is doing very badly themselves, so I would count on their decisions to bail you out.


Cogent gets their bandwidth from peering, that is how they are able to get it so cheap. They bought a bunch of ISPs two of which were tier1 so they were able to immediately have all their bandwidth for free. The problem is they went around announcing this to everyone. Basically peering means a company like Verio decides to give you free access to their network. You can send all the data to their customers you want.

But cogent was stupid, they announced this in a large public forum. Already some tier1 providers have guaranteed they are gonna no longer allow cogent to peer with them. Some providers have told cogent they will no longer allow cogent to peer any more bandwidth with them.

This is one of the reasons you see cogent finding any excuse to kill some gige customers. This is one of the problems cogent routes are very slow to some parts of the country. You will constantly getting 300ms pings to certain places on the cogent network.

The biggest problem with cogent is alot of people don't even realize what makes them bad. The "Its fast for me" mentality isn't a good way to decide on a provider. There are plenty of people around the world that can barely load a cogent page.

I have webair hosting AND use Cologroup, I can tell you I see the difference everyday now.

Very nice post.

The math is indeed very simple and you do get what you pay for.

Of course, when you have a high volume of traffic, what you pay for is a lot smaller ;)

it might be spam, but its an honest recommendation. We use:

Mach 10 Hosting
http://www.mach10hosting.com/

Some they built, some they bought and much of it they lease.

About Yipes, they went Chapter 11 to prevent Level 3 from disconnecting them. Yipes do not have their own nation-wide network as far as I know.

SinEmpire - Very well said. Any objections to copy and distribution?