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.