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Hosting Giants Teaming Against Small Businesses
BlueToast writes "Hosting giants SoftLayer, ThePlanet, Hosting Services Inc., and UK2 Group are teaming up to wipe out small competitors like SimpleCDN. Though ThePlanet isn't directly involved in the slicing of SimpleCDN's throat, ThePlanet runs the sales chat scripts for SoftLayer (check your NoScript). As a loyal customer of SimpleCDN, I really do not appreciate the disruption of service to a company I have been with for over a year. SimpleCDN's president wrote, 'Absolutely no valid reason or warning was or has been given for this termination, and our best guess currently is that these organizations could not provide the services that we contracted and paid for, so instead they decided that terminating services would be the best solution for them.'"
Softlayer and ThePlanet merged a few months ago. And UK2/"Hosting Services"/100TB simply resells Softlayer's services.
100TB has a bandwidth pool deal with Softlayer, then oversells like mad. SimpleCDN used 100TB [I -believe-] to get excellent bandwidth deals.
Seems like 100TB [and perhaps Softlayer] weren't happy with this.
UK2 also confirmed to us many times that their business model fully supports 100TBs of transfer, and SimpleCDN has been utilizing these servers for many months now without problem.
Again, more emails from Ditlev and UK2...
"We have no problem with anyone doing 100tb/month - month after month, our business model fully support that"
The 100TB website still advertises 100TBs of transfer with each server, along with "As you would expect unmetered bandwidth from 100TB is truly unmetered and unshared, with no limits and no small print. Unmetered servers use exactly the same SoftLayer network as their 100TB equivalents and are fitted with 1000Mbit ports."
So 100TB is still advertising and selling this service to others, but for some reason SimpleCDN is turned off? Why was SimpleCDN singled out, while this "offer" is still being made to others?
Why was the service provided for months, until one day a demand was sent requiring us to immediately shutdown all servers?
Don't know who BlueToast is - and I am sure Slashdot can confirm this for you that it isn't us.
/. and saw this post.
I've been up for about 72 hours straight helping customers move to CloudFront and MaxCDN, and just happened to refresh
How do you say that we "over use" bandwidth? We purchase dedicated servers from a company that provides 100TBs of bandwidth with each server, and the majority of our servers use MUCH LESS than 100TBs of bandwidth. This is the service that has been sold to us, so how are we "over using" bandwidth? Again UK2 did confirm that their business model fully supports offering 100TBs of bandwidth with each server. And again, we're using much less.
If they can't provide this service, then why are they offering it? Why did they terminate SimpleCDN, but continue to offer the service to others, knowing they can't provide it?
Why did UK2 say the decision was "out of their hands"? Did SoftLayer force them to shutdown SimpleCDN? But then why SimpleCDN? Why not all of their customers doing 100TBs on their servers?
So many questions, and so far no answers from the "giants".
Thanks,
John
SimpleCDN Support
Believe me, we tried everything to avoid this, trying to understand what the problem is, and if we can pay more or limit usage or do ANYTHING to prevent termination. Their answer: No. Goodbye. Tough Luck.
Obviously UK2 is not sane...
"We are unable to continue allowing our clients to run CDN services within our 100TB network. We are currently updating our Terms of Service to include this requirement for all clients. I would ask that you immediately comply with this new policy update; otherwise we will be required to disable your services. I apologize for any inconvenience this might cause you."
There you have it. First communication includes an immediate demand to terminate service, and oh yeah, they are "updating" their ToS.
Well UK2 today said that the decision "... was out of our hands." So who would that leave?
Unless SimpleCDN is quite lucky or was rather careful, the contract the agreement with the hosting company could be terminated at will presumably with return of money for future service. After all if you can write such a contract and get people to agree to it, you really should since it protects you against all kinds of things. However, for breach of contract things they'll have to look to lawyers which is unlikely to them, or anyone else, any good.
If the reason for the termination is related to Softlayer wanting to exclude other CDNs from using their normal services, there could be a question of anticompetitive behavior which is not governed by contracts. What could be useful, though not necessarily to SimpleCDN anytime soon, is filing a complaint with the FTC and encouraging the inconvenienced customers to do the same thing. Filing a complaint is a fairly simple matter. Similarly sending a letter to your local attorney general's office (in this case probably the local US Attorney General's office) is unlikely to hurt, though it would be unlikely to result in anything. Since it's a communications system the FCC could be contacted, though again not likely to lead to anything happening. The FTC is the agency generally in charge of unfair/deceptive/anticompetitive business practices so that may well be the best place to send concerns.
SimpleCDN are saying that the ToS were changed specifically to shut them down. I imagine you're quoting from the new ToS.
I presume the ToS also say that they have the right to change them unilaterally without notice. Maybe we'll finally get a court ruling on whether that's legal or not.
No... in the case of bandwidth, you can actually do this, and I think that was the point. My ISP does this all the time. It's because "bandwidth" is a damned flaky metric in the consumer space. I pay for 10 mb/sec (supposedly) DSL but rarely, if ever, do I actually get that -- even locally, from home to business -- because they grossly oversell the capacity they actually have in place. My ISP specifically says in the service agreement that they don't have to supply the designated plan bandwidth, and if you can't connect as you need to, tough cookies. Legalese to that effect. I would bet you dollars to doughnuts that if you added up the bandwidth my ISP sells against the pipe they actually have, you'd find a mismatch of several orders of magnitude. This allows them to sell bandwidth for less than they pay for it by making it up in volume -- it's an inferior product, that's all.
I've fallen off your lawn, and I can't get up.
I spent 7+ years in the hosting industry. I can tell you right now that when Ditlev said his model "fully supports" customers doing 100TB month over month, my "bullshit meter" went through the roof. At best that was a simplification of his business model (sure, ONE customer can do 100TB month over month, as long as 100 other customer's don't - or perhaps he means 'sure, you can do 100TB for 3 months, as long as you don't use your server at all the other 9 months of the year').
So here's the real deal for you. The cheapest bandwidth I've ever heard of, ever, in the hosting industry was about 2 dollars/megabit, and this was NOT premium bandwidth, and it was single provider (Cogent). That price was let slip on the WHT forum, in fact, so I'm not giving away any privileged non-public information. Chances are good the top companies get even cheaper pricing (bigger than hosting providers) plus even hosting providers these days do a lot of peering to try to cut costs. But they also typically offer blended bandwidth from multiple providers (upping their cost/megabit), so the math below is still probably being too nice to them.
But let's go with this $2/mbit. There are 1000 megabits in a gigabit. That's $2000/month for a gigabit line. Now at best, a gigabit line can do 125 MB/s (in one direction - and since most these high-end bandwidth deals are typically charging on only the busier direction with the other way being 'free', that works for this example). 125 MB/s * 60 seconds * 60 minutes * 24 hours * 30 days = 324,000,000 MB / 1024 = 316,406.25 GB / 1024 = 308.99 TB. That's 308.99 TB for $2000. $2000 / 308.99.
That's $6.47 per TB. They're offering 100 TB. That's $647 COST per server (and I'm not even including the cost of the actual hardware here; that $201.15 lowest-cost server on their site is a quad core Xeon 3220 box that has some cost attached to it, and it eats power which has cost attached to it, plus you've got to factor in support burdern, infrastructure burden, etc, but hey, let's say by magic that's all free!).
Each server UK2 runs at that price is costing them 3x what they made on it in revenue, minimum.
Generally this works because every individual customer is not pushing 125 MB/s 24x7. Not even close. Most probably don't even push a third, so they're flat-out profitable. Others don't even push a tenth, others, not even 1 TB (I know this to be true personally, as I have a buddy with a 100TB server who does not push 1 TB a month - he's on 100TB because they actually had one of the best deals on a dedicated server from a cost per MB of RAM and HZ of CPU, on TOP of the 100 TB of 'free' bandwidth). They're making their money, like (news flash) EVERY OTHER HOSTING COMPANY - overselling. Do not listen to them say they can totally make money if every customer pushes max each month. They can't.
You want proof they can't? SimpleCDN represents a high-usage customer; possibly even approaching the 100TB on each server, if their software was good enough to not have CPU/RAM be the bottleneck. A CDN or other content streaming site is probably the single worst customer I can think of for an overselling operation; and lo and behold, they've been shut off. Case closed - they cannot actually provide every customer 100 TB a month. They can provide a certain % of their total customer base 100 TB a month, and then it's not profitable anymore.
Good news for all the rest of 100 TB's customers is that with SimpleCDN gone, now there's probably more chance of them getting away with 100 TB/month for a few months without being shut off. :)
Now to be clear, I'm pinpointing UK2 group here, but this could be Softlayer. If UK2 group is getting a super deal on bandwidth from Softlayer and it's Softlayer who is essentially overselling (plausible), then they're the ones likely pushing for the shutdown of SimpleCDN. Whoever's business model actually has the oversell in it (or both of them) is the one who's happiest to see SimpleCDN go.
Truth is, a company as large as SimpleCDN s
Yes, there is plenty wrong, if you have signed a contract with the customer saying you will sell your service to them you can't just go and change your mind later and say you'll take their money but don't have to give them service because you dreamed up some new rule after they paid you. It's utter crap, how can you not see this?
Don't think for a instant that I disagree with you, but unfortunately there's a big difference between what is right, and what "is"
Right now just about every TOS type document has "we reserve the right to alter this agreement without notice at any time" clauses. It is time to test that, though. Just because you were arbitrarily forced to agree to something to use a service, doesn't mean it will stand up in court.