Re: [cobalt-users] 150GB for $70

["Steve Buza" <steve@xxxxxxxxxxxxx>]

----- Original Message -----
From: Bayhawk <bayhawk@xxxxxxxxxxxxxx>
To: <cobalt-users@xxxxxxxxxxxxxxx>
Sent: Wednesday, April 25, 2001 11:20 PM
Subject: [cobalt-users] 150GB for $70


>
> /quote
> You wanna try explaining to me how anyone can give you "real" 150GB of
> transfer per month for $70? This is equivalent to almost half-a-megabit
per
> second, 24/7, every second of the month... for $70.
>
> A T-1 line (1.5 Mbps) costs about $1,500. Smaller links are more expensive
> per unit, so a 512 Kbps link would cost about $1,000. But since they buy
in
> bulk, let's assume they get a T-1 for $500... absurdly low. How are they
> going to make money if they sell that for $210?
>
> Read your terms of use carefully. Betcha you were just so dazzled by the
> number you just haven't fully understood how it works.
>
> (It still might be a deal you're happy with... I'm not telling you to
leave
> them; just to know the difference between truth and marketing.)
> /endquote
>
> Im going to guess you don't deal with hosting companies to much. The 150GB
> represents the amount of data transfer a month you are allowed.
> The average hosts allots you between 20-50GB. The 150 can not be disputed.
> If my web viewers visit my site enough they will generate allot of data
> transfer. 150Gb a month is excellent. This is not the only thing that sets
> the RackShack apart form the rest of the industry. With most hosts if you
> exceed your allotted monthly bandwidth total, they will normally charge
you
> for another large block usually 20-50 GB chunks for anywhere from $75-$150
a
> month. The RackShack charges you by the GB if you go over the 150
allotted.
> and its 3.50 a month.

The point still remains that rackshack is overselling their bandwidth, much
as ISP's oversell
their modem pools and tell you that your use is "unlimited."  If you
actually try to use the
system 24/7 most ISPs will ask you to kindly find another ISP because they
can't actually
afford a whole PRI trunk for each user at $35 per month when they are only
collecting $19.

The offer for 150Gb is based on the same theory that 90% of the customers
who pay $70
per month are actually only going to transfer <30Gb of data with a full
third of the sites transferring
less than 10Gb per month.  This is how they intend to make money.

Whether the business plan is sound remains to be seen, but if they hold on
to the 90% while the
remaining 10% of heavy users go elsewhere when the bandwidth becomes
saturated, they'll have
turned a profit, even if they have to refund a few months of hosting fees to
the loud complainers,
and I'm certain that the hosting contract explicitly limits their liability
to hosting fees.

Steve