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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.'"
It's unfortunate to see obviously overselling hosts not even try and make right by their sales pitch. However, those "to good to be true" deals really are "to good to be true". You get what you pay for. Best of luck to the SimpleCDN team and their future endeavors.
Maybe yes maybe no - tonight in an email to an angry SimpleCDN Customer Ditlev (pres of UK2) confirmed that UK2 apparently had "no control" over this...
--- Obviously there are two sides to this story, and hopefully we will get a chance to air ours. For now, I can only say that we are sorry about the problems this may have caused to anyone, but that it was out of our hands. Best, Ditlev ---
So who exactly forced UK2 to shutdown SimpleCDN? Was it SoftLayer?
Time will tell - but so far it seems Frank Wilson has been telling SimpleCDN's side of the story truthfully from day one.
People have been having a hard time believing that some sort of "conspiracy" exists to remove SimpleCDN from the marketplace - but each passing hour seems to support this more and more.
What does this mean for the thousands of hosting companies that rely on infrastructure providers like SoftLayer?
Again I want to remind our 5,000+ customers that our entire support staff is available to help transition to other CDN providers, and we'll do everything and anything that we can to help during this terrible situation.
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?
I still have absolutely no frigging idea what it's about.
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.
how can they make any money selling for $10000 what SoftLayer directly charges $50000 for?
They lose money on each unit but they make it up through volume.
What one fool can do, another can. (Ancient Simian Proverb)
We're posting followups so that our customers know we are on top of this situation, and are doing everything that we can - whatever that may be. Obviously our options are limited. So many customers are stranded, so many are going to fire up live streaming tomorrow morning for their church service - and it isn't going to work.
Our goal is to keep our commitments to our customers, and if we can't we'll do whatever we can to help them secure alternative services.
We appreciate other CDNs who have offered our customers discounted pricing, and have made their sales teams available on the weekend to turn new customers up right away.
Our only goal is to help them. We've emailed, we've posted - and we're still receiving frantic calls asking why the service isn't working. We're using any and all channels to communicate with our customers.
You ignorant tool, have you ever submitted a story to Slashdot? If you had, you'd know that they don't hit the front page right away. Sometimes it's hours later, many times it's days. If you do post a story, it's not like you sit there, wait a few minutes, and then start replying to people, because you may very well be sitting there for days.
I'm guessing that "BlueToast," whoever that is, even if it is a sockpuppet, as you so flagrantly accuse him/her of being, likely posted this in the middle of the day or early evening. It hit the front page at 5:11am US Eastern/2:11am US Pacific time. Given that the story is about a U.S. provider, I'm guessing BlueToast is probably sound asleep right now, and SimpleCDNNOC's claim that he/she is up in the middle of the night working for his/her customers not only plausible, but probable.
By the way, on what are you basing your accusation of "flagrant over-use of bandwidth?" Do you have a copy of the contract that SimpleCDN and their providers? Do you have the metrics showing how much bandwidth they're using, and how much is/was available?
Slashdot is "News for Nerds, Stuff that Matters." Let's see... News? Yes, I think this is pretty damn newsworthy. For nerds? Well, it's squarely in the IT/technical realm, so yeah, I think that it would be of interest to nerds. Stuff? It's definitely stuff. That matters? Well, if you're one of SimpleCDN's thousands of customers, or someone who consumes those customer's content or data, or if the submitter is right in that this activity may spread to other hosting providers (which it sounds like it may), then that would be a big green checkmark in that column as well.
I could just as easily accuse you of being a sockpuppet for one of the nasty evil companies that is screwing SimpleCDN, posting on Slashdot as an Anonymous Coward to try to add insult to the injury you've already caused, and my accusation will be just as valid and appropriate as your little rant.
I guess that's just a long way of saying Anonymous Coward - if you think this story isn't worth reading, then don't comment. If you can't do that. STFU. Now get off our grass!
Except they don't. Because it's impossible.
Bandwidth isn't something you can just oversell without consequence; if you have a massive overage from people actually using what they are paying for then you are probably out of business.
See, I think what happened here is that 100tb had a massive overage and found out that SimpleCDN was one of their big players and they are frantically trying to get the big guys off their bandwidth pool so that they can hedge against the overage while already having SimpleCDN's money. This would fit into my projections for the original business model of 10tb.com before they became 100tb. At least with 10tb there was some sign of it being at least somewhat realistic; with 100tb there is no way.
Or... let's think of it this way:
Say you buy a server from 100TB for $201.95/mo (baseline server with 100TB bandwidth). This works out to being ~303mbps 95% on a typical burst pattern (and likely much higher for streaming traffic!). The server probably costs $100/mo just to run, leaving $101.95 for bandwidth (in this example we're not making any profit mind you!).
This means that your ~303mbps 95% breaks down to $0.33/mbps.
Not even BANDCON can hit that price point and they go really, really low.
This business model does not make sense to me. There is very high risk and I see no way that they can hedge against overages if everyone actually opens up and uses all of their 100tb allotment. Maybe they are paying by GB instead of mbps but that makes no sense because then SoftLayer would be holding the bill and frankly I don't think they are that stupid.
So no, it's not possible to make up profit through volume on this when you keep in mind the risk you are hedging. It's just too much of a gamble for any sane business operator to even consider.
I can't use SimpleCDN because they're gone.
I can't use Amazon's CDN because they're jerks to wikileaks.
I can't use VPS.net's (UK2/100TB) CDN because they're jerks to SimpleCDN.
I can't use anyone who runs Softlayer's CDN because they're in kahoots with UK2.
I can't use anyone who runs Layer3 because they gave in to Comcast (netflix story from a while back) and will probably jack up my prices.
I can't use Akamai because I don't have deep pockets.
If Google comes up with a CDN I can't use them because they steal everyone's privacy.
Which is why Amazon, PayPal, Visa and MasterCard all terminated their dealings with WikiLeaks, right?
They weren't presented with any kind of court order telling them to do so, so obviously they chose to do it on their own.
I used to work for UK2 out of Chicago and I can confirm their shadyness. They advertise 100TB of transfer but if every server on every rack they have at SL utilized this they would be out of business.
Ask their sales guys to explain how it works, grab some popcorn, and laugh as they fumble their reply or ignore you.
100TB = SHARED bandwidth, as in all servers on a rack or switch share the 100TB. That is their deal with SL, or at least it was a few years ago.
This guy probably caused an overage so they pulled the plug on him.
When I worked there I did the same thing to other accounts for various other reasons. Sorry, but this is not unheard of I'm afraid.
For the record, OP: Hosting Services Inc. *IS* UK2, and they also resell BOTH The Planet and Softlayer's servers. There is only one real Hosting Services DC and I don't think that runs dedicated boxes. In all, UK2 has somewhere around a dozen brands, maybe more by now, that are spread out through these data centers.
Oh and Ditlev is a PR expert, I would not trust anything out of his mouth. Just saying.
Why does it matter what they're going to use their paid-for internet to watch? Would it have been any better for GP to say "for their pr0n addiction"? Or "to download the latest leaks from wikileaks"? Or "to download security fixes for their Ubuntu systems"? Really, this could be a text-book case of "They came for the X, but I'm not an X, so I said nothing." And you're not merely doing nothing, you're cheering them on because you're not an X?
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