How low will bandwidth prices go?
 

The price of bandwidth keeps falling, and I think its safe to say that prices will continue to fall.

How low do you guys think it will go in the next few years?

they'll be paying us in just a few months...

I think it will end up free, paid for by advertising.
:2 cents:

Personally, I think it all depends on what Cogent does. They seem to be the leader in low priced bandwidth. So if Cogent lowers their prices, then it will keep goin lower. Although, maybe we'll see some more Cogent copycats that come out with lower prices than Cogent and then they'll be the leader.

Right now, I think if you buy a 100/mbps connection from Cogent, it costs about $0.10/gb if you work it out. So, in the short term its unlikely we'll see prices any lower than $0.10/gb

Wrong, its a 100 Mbit x 340 gigs per Mbit = 34,000 / $3,000 = 11.3 cents per Gig. And cogent wont last and no prices wont go lower. as soon as cogent finishes losing the rest of their peering points and then finally closes, bandwidth will be back to normal, and quality will be better, and prices will be where they should be.

The price looks like 10 cents a GB ($3000 for 100 Mbps, $30 per Mbps, 300 GB per Mbps, 10 cents/GB). Obviously there are others costs (local loop, routers, rack space, power, switches, servers, other hardware, cooling, support, labor etc.) so the OSPs cost is higher than 10 cents/GB.

I agree with your second statement through, it is likely that cogent will go out of business either because they'll run out of peering points or money, and then bandwidth prices will go back to "normal." I'm not too worried about cogent going out of business, we have backup connections.

The other option is that cogent will stay in business (how?!) and others will lower their prices, unlikely.

Why would Cogent lose its peering points?

Your clients might start to worry when their prices are raised.

Cogent goes under =
Prices go up for existing clients =
Clients leave =
No incoming cash flow =
You go under.

Why worry?

Someone explain exactly why Cogent will go out of business??

Hmm, maybe he wants to go under?

Yeah, Someone explain exactly why Cogent will go out of business??

what goes down must come up

or is that backwards :1orglaugh

no, our business plan is much better than that.
Unlikely many of the hosts that popped up in the last 6 month, we have been doing this for many years and have a very solid plan in-case (when?) cogent goes out of business, it will do more good than harm.

Besides, your logic is flawed, especially step 3. I'm sure you can figure out what I'm talking about.

"Yeah, Someone explain exactly why Cogent will go out of business??"

... nobody will/can explain that. you´ll get a lot of bullshit when the name cogent come up. I´ve been driving a hell of bandwith through cheap cogent lines for well over 7 month now. and I have to say it has been great so far. I have never seen one of those cogent bashers actually running anything through cogent ... they´ll change their minds as soon as they will use cogent the first time ...

the bw prices will probably stay the same,,, if only the economy is getting better.

I agree....I've been using Cogent for about 7 months now too and its fine.

I'm not sure why so many people bash cogent. Maybe they like paying higher prices?

I know.... I'm being dramatic.... :winkwink:

I think even if Cogent went out of business. The competition between other providers would continue to drive prices lower.

Mayby because many of the new hosts that popped up are putting too many clients on their servers so they get slow. And people then think that it is Cogent that is slow when it is the host that sux? Just a thought

I got nothing against cogent.... good stuff in my view.

Thats a good point, but that would be true of any host that oversubscribes their network no matter who they're connected with.

What i knew cogent owned by cisco

Do you know What "CISCO" in MEANS:) in business

Cogent is the best thing to happen to hosting in a while.

Everyone who hates Cogent still feels the benefits of them being around when it's time to pay the hosting bill.

Your english makes absolutely no sense.

anything that seems too good to be true usually is

Yeah. But it is cheaper to get started with cogent that with other BW providers since you can already compete with the beginning with the big hosts on the price. so they probably spend less on hardware and more time on getting clients instead of finding a balance

Their business plan could fail because they are not profitable and won't be for a very long time.

They are a publicly traded company and they are running their business like a private company. Stockholders demand to see profits at some point. How do you think the stockholders will vote? A) Liquidate and make a quick buck. B) Raise prices dramatically and make some steady gains and maybe become profitable or C) loose money forever until your stock is worthless.

What would your opinion be if you were a stockholder in that company?

Their original bandwidth model was based on providing broadband to office buildings. They say right on their web page that ISP's are not their primary target customers.

Why?

Because hosting companies use a shitload of outgoing bandwidth, like a 10/1 ratio.

I don't think the big players are bashing Cogent, but they have seen this all before with Exodus...

http://siliconvalley.internet.com/ne...892671,00.html

The bandwidth wars were finally coming to an end after most of the .com's died... prices dropped from a premium and stabled out.

The truth of the matter is that a guy just pushing some galleries at 50 cents a gig won't be affected either way... He's making some bank by using Cogent and that's fine. He's an opportunist like most webmasters.

It's the hosting companies that based their business model off Cogent's pricing and will not be able to resell anywhere near that rate if Cogent takes a shit. (Contracts become null and void once a company goes chapter 11).

Big hosting companies who have already been around for years and are getting decent rates from major providers and are not about to take a chance on this.

The truth is that Cogent isn't bad performance wise and if your a guy that's only using a few hundred gigs a month then go for it... you've got nothing to loose.

How long did it take you to write that?

Interesting. Cogent started this year with $50mil in cash. However, they lost $60mil last year. They may well have to go begging for more cash by fall or go bye-bye.

Keep in mind though that if cisco is deeply involved and Big Daddy Chambers believes in the company, then the company could very well survive to profitability. Cisco has 7.5billion with a b dollars in the bank. Feeding cogent 50mil a year for a couple three years is nothing for Cisco.

About 5 minutes... why?

Excellent points bash...I agree with you. That was good reading...

They will not "feed" it if it doesn't do them any good.

I can't buy that. Cisco is already having their own problems, look at their stock in the past year. ...They wont feed a company that doesnt turn a profit for a very long time.....Nope they just wont do it.

Agreed. That's what I meant by Cisco needing to believe in Cogent i.e.Cogent's ability to turn a profit in the future.

My last post kinda covers this. Keep in mind that Cisco made $600mil in the last quarter. For a company operating in the middle of a big telecoms downturn, they're doing ok.


Corrected info

50 million a year for CISCO is absolutly nothing!
yes, CISCO will not keep pouring money into a dying business, but youve got tyo keep in mind that their time frame is much longer then anything we are used to

almost every dot com out there is losing money......and most are projecting theill keep losing money for another couple of years....which makes most of these companies unprofitable for 4 or 5 years in a row! That is how the mainstream business is. In porn if your site is losing money for 6 months, you gonna close it down...it doesnt work that way in corporate america

CSCO will keep feeding money to cognet for at least another 2-3 years....a company like CSCO mainly cares about is long term potential.....specially when it has such deep pockets as they do

50 million a year is what mr john chambers himself was making before the dot com collapse(after stock incentives and salary). that amount of money is nothing for CSCO

you don't think their willing to spend that for cognet??

To add some perspective, $50 mil is 2/3 of 1 percent of CSCOs cash on hand.

Yes...everyone seems to forget all these things when thinking Bandwidth is this cheap. There is ALOT that goes into it rather than just plugging in a network cable and saying here is your bandwidth sir!

If it wasnt for the cheap bandwith right now..alot of webmasters would be out of business(the gallery guys),with the way conversions have went..everyone should be kissing cogents ass!.
:glugglug

Well said. While I doubt you'd actually disclose what those extra costs end up adding up to, I imagine it's a good bit of coin.

Cogent will die.

Cisco does NOT own it at all. They simply invested a massive amount of money into, so I guess in that sense they do.

Post-Enron (I hate that phrase), I think the whole "hey, we'll give you VC in exchange for buying a ton of gear so we can show good sales numbers" stuff will be looked down upon, so I'm hoping (fingers crossed) cisco will just cut their losses and get the hell outa dodge.

If you don't understand why cogent is not able to get new peering arrangements setup, just use the search function for some of my posts under the subject. To sum it up, the players that they are attempting to put out of business by undercutting (selling far below cost), don't take kindly to making their business strategy viable. I think the shit will hit the fan a lot more in regards to this.

I think the hosting world will be a much better place w/o cogent. It will get rid of a lot of worthless hosts that don't know shit, and then true price competition can begin again. Right now when you use cogent bandwidth, it's being subsidised by the VC backing of cogent. ;) So.. you are burning cisco's money up! Go submit more galleries! ;)

Notice the whole pro-cogent is entirely price-based, they have absolutely no other argument at all. Just rah-rah, cogent rocks because I had it X months and it rules and it rocks and I only pay $3k for 100mbit!

Don't get me wrong, I advise my own customers w/o a clue to use cogent when it's applicable. I tell them to put their main site on my stuff, and host images/etc. on the cheapass cogent provider-of-the-day while they can. They save a ton of money.


Oh well, been up over 24 hours now. In short, ride the horse while it lasts, because it shall soon be dead. Just make sure you have a backup plan for when cogent goes under and you can no longer get sub $1.00/gig bandwidth unless you're absolutely huge.

So in short, no and yes. Bandwidth will go up when cogent dies, then slowly go back down to near cogent levels within a few years when it's financially viable to do so.

I think cogent has done far more harm to the ISP industry than help. Although I do admit it has fostered a bit of price-cutting and such, it also introduced a bucket of worms that will be damned hard to shut.

peace,

-Phil

Phil21, I could get bandwidth for less than $1.00/gb without using Cogent, so I don't know what you're talking about in your post.

do you know how rapidly cogentco is growing this year?

way more then any other network provider

i think this year is the year people really realised them and their fair prices, and good pipe.

Yeah, Cogent is getting customers like a muthafucka.

It aint goin out of business.

OK, I am not going to ramble on to much, but I'll give you some real info:

1. Bandwidth Prices (Current Market Situation): Yes, Bandwidth is getting cheaper. I have a contracts for additional fiber through 2 more providers, I just have not deployed them yet. 1 is for $60/MBps and the 2nd is for $75/Mbps and they are both through well known companies with a great networks and peering. I'd tell you who they are, but I had to sign NDA's. The $60/MBps is only if I purchase 400 MBps and the $75/Mbps is If I purchase 200 MBps. This is twice as much as Cogent, but it is well below what we have been seeing in the past.

2. Bandwidth Prices (Future Market Situation): Technologies will have an effect on Bandwidth Prices, guaranteed. What happens when you take something and increase the supply 4x?, the prices drop. OC-768 Hardware is ready, and telecommunications company are getting ready to deploy it. To explain, by upgrading the equipment that routes Internet traffic, the new hardware will increase OC-192 lines to OC-768 lines. The existing fiber optic lines will now be able to transfer at 4 X the speed, quadrupling a networks bandwidth once deployed. Alcatel, Lucent, Nortel and Ciena are all companies that are making this possible by developing the next generation of routing equipment. This technology is expected to reach the market in 2 years. (I'm waiting)

3. Cogents Future: Cogent has secured nearly $500 million in capital to fund its aggressive nationwide network build. They are backed by Cisco. In response to Bash's mis-guided comment, Cogent has access agreements to service over 3,400 Buildings totaling close to one billion square feet of space in 20 of the nation?s largest markets.

4. What if?: What if Cogent goes out of business? How does it effect me as an ISP and how does it effect you? Well, as an ISP, I am setting myself up with the next best deal and deploying that as we speak. If Cogent fails, I would barely have to raise my prices. As a webmaster or adult business owner, you will have to choose the next best thing or just give up on your business. My focus as CEO of Cologroup is to offer the best prices available to my customers. I am constantly doing research and laying the ground work so that if something did happen to Cogent, my customers would not have to change ISPs, they could still get the best deal in the industry from cologroup.com

Well, that is my input, and I hope my customers and anyone else who uses Cogent finds it useful. Just keep in mind, this is the adult indutstry, no banks finance us, there are no IPOs, and you dont last loosing money or barely making it. If you have a chance to cut your costs, cut your costs and be happy about it.
:thumbsup :2 cents:

$1.00/Gig is equivelant to $320/Mbps. I hope you are not really paying a $1.00/Gig

Jason @ Cologroup is the smartest guy in the hosting business.

Thats why I have a server with them and its running great.

the guy is obviously smart

no need to kiss his ass

theres not going to be enough brown left for the rest of the ass kissers!

:)

I've never heard of any Tier 1 providers that make you sign a NDA just to quote you a price. Has anybody else?

i have.

when you deal with big boys, thats how you do things