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Businesses Networking The Internet

Hosting Giants Teaming Against Small Businesses 163

Posted by Soulskill
from the capitalism-never-gets-old dept.
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.'"
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Hosting Giants Teaming Against Small Businesses

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  • Actually (Score:4, Informative)

    by micksam7 (1026240) * on Sunday December 12, 2010 @06:18AM (#34527930)

    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.

    • Re:Actually (Score:4, Informative)

      by SimpleCDNNOC (1957482) on Sunday December 12, 2010 @06:33AM (#34527948)
      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.
  • Unfortunate (Score:4, Interesting)

    by Crothers (1288120) on Sunday December 12, 2010 @06:30AM (#34527940)
    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.
    • by SimpleCDNNOC (1957482) on Sunday December 12, 2010 @06:40AM (#34527954)
      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?
      • by Crothers (1288120)
        Very good questions that I would love to hear the reasoning behind - but like all big .com's we'll never get an explanation.
        • by Khyber (864651)

          You'll never get an explanation because you won't get off your chair to demand one.

          Do it, you'll be surprised at the results if you press hard enough.

      • by nenolod (546272)

        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.

        Why didn't you look at their business model directly? What you were getting would cost at least 5 times more directly from SoftLayer...

      • by Anonymous Coward on Sunday December 12, 2010 @02:52PM (#34529780)

        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

      • You were not singled out. At least not "just you". A number of websites have been pulled over the last few weeks. The excuses vary. Some of these sites complain publicly on webhostingtalk.com where you can read more, others have quietly moved their website after an unexplained service interruption. They're simply removing anyone who uses too much data (which can be less than the 100TB advertised), causes too many DMCA related work (some services are prone to DMCA notices, UK2 refuses to state what they cons

    • by quetwo (1203948)

      In my mind, SimpleCDN is the one who screwed up. For any company trying to start a busness (espically one like this), who signs up with a provider and allows that provider to change the terms of service without any warning?!? If my business depends on your service, you better bet that my contract with you either clearly outlines the terms of service (and only allows them to be modifiable by an amendment to the contract), or at the worst, provide a 90-day change window.

      I know we can't all be lawyers, but d

  • by Anonymous Coward on Sunday December 12, 2010 @06:42AM (#34527960)

    I still have absolutely no frigging idea what it's about.

    • by klingens (147173)

      It's about advertising for SimpleCDN.

      • by SimpleCDNNOC (1957482) on Sunday December 12, 2010 @07:03AM (#34527994)
        How is this about advertising? Our entire service is down. We are helping our customers move to other CDN providers.

        We are out of business here, and are doing right by our customers moving them to our competitors. We're not selling anything or taking orders.

        This is about something much larger - infrastructure providers terminating services with no notice and no reason.

        It could happen to anyone for any reason. You thought your dedicated server was safe - but think again.
  • by alfredos (1694270) on Sunday December 12, 2010 @07:05AM (#34528000)
    No sane company terminates "right the hell now" a paying customer, even if it is unprofitable. Unprofitable customers usually are shown the bill or the door hoping to either convert them to profitable customers, or to take their business elsewhere without causing too much fuss. My gut feeling agrees with the AC that over-use of bandwidth may be the case. However, sane business practice demands to try and straighten the situation before starting using the scissors. I don't see any of that in the only side of the story commented thus far - unsurprisingly, since TFA comes from that one side.
    • by SimpleCDNNOC (1957482) on Sunday December 12, 2010 @07:13AM (#34528010)
      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.
    • by MartinSchou (1360093) on Sunday December 12, 2010 @08:27AM (#34528196)

      No sane company terminates "right the hell now" a paying customer, even if it is unprofitable.

      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.

      • by alfredos (1694270)

        Ok, you have a point there, but Wikileaks is a very special case. I meant to describe the usual business practice.

        To be more specific yet, I mean the usual business practice in the hosting industry.

    • "My gut feeling agrees with the AC that over-use of bandwidth may be the case."

      I hear about "bandwidth over-use" once and again, but how the hell could anyone over use a resource provided on-demand? In this case, the network provider have all the ability, even on the cheap ,to control their customers' resource usage. If they contracted 1TB/month per server, how could they be able to use one single bit more than this? The provider could just say "see? 1TB; you are off till next month the first" a simple

  • there has to be more to the story. ive been with softlayer for few years now... and they don't seem the kind who would do this for competitive advantage. Wait until Monday evening before forming an opinion... http://www.sajalkayan.com/simplecdn-goes-down-a-case-for-using-multiple-cdn-providers.html [sajalkayan.com]
    • Re: (Score:3, Informative)

      by SimpleCDNNOC (1957482)
      Well UK2 today said that the decision "... was out of our hands." So who would that leave?
      • Well UK2 today said that the decision "... was out of our hands." So who would that leave?

        I wouldn't blindly trust someone making that claim. That could mean just about anything. "Out of our hands" could also mean that their corporate mandate is to make as much money as possible, and the bandwidth you're using (and, I assume, contractually allowed to use) could be more profitably allocated to other customers. Therefore, they regret that they're going to have to break their contract and shut you down. It's "out of their hands" only in the sense that it's "in the hands" of their investors.

        I'm

      • It might leave governmental action.

        Department of Homeland security gave them a 'switch off, or you're going to jail' order.

  • Options (Score:2, Informative)

    by Anonymous Coward

    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 w

  • Great... (Score:5, Insightful)

    by Anonymous Coward on Sunday December 12, 2010 @08:07AM (#34528156)

    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.

    ...at this rate I'm hoping I don't really need a CDN.

  • by mukund (163654) on Sunday December 12, 2010 @08:40AM (#34528238) Homepage

    I used to host with ThePlanet for my websites. Though their services were pretty stable, they charge so much that I looked for other vendors after a couple of years. Switched this year to Hetzner.de. They provide a dedicated server [hetzner.de] for 49 EUR that gives me i7-920 quad core, 8 GB of RAM, 2 * 750 GB of disk space and 5 TB of bandwidth per month. Plus they have a great web-based system for remote rescue, reboots, and all services that run on the machine are now available on native IPv6. I haven't had any hiccups so far, and it seems well worth the money.

    Their support staff seem to struggle a little bit with English, but their web-based rescue interface leaves little to ask the service staff about.

    • by mukund (163654)

      In reply to my own comment, I sound like a shill.. I wish I could delete the parent comment.

      I pay Hetzner ;) and they have done well to be appreciated. Websites I host on this box include banu.com [banu.com] and mukund.org [mukund.org].

      • Where are the servers located? Their own in Germany? Or reselling US-based?

        Also, does Banu or Mukund require enough resources to warrant your own server, as opposed to shared hosting?

        • by mukund (163654)

          Apologies for the delay in replying.

          Where are the servers located? Their own in Germany? Or reselling US-based?

          They run their own datacenters in Germany. Check their website for details.

          Also, does Banu or Mukund require enough resources to warrant your own server, as opposed to shared hosting?

          Banu is a company. We serve the main HTTPS website, DNS, email, XMPP chat, mailman lists, bugzilla, git repositories, rsync for /pub, run virtual machines for builds, run other bits like IRC bots, bittorrent tracker + seed for large files, shells for people, etc. We are also working on a shop section.

          Granted some of these can be done using free services on the net, but:

          1. We lose identity by distri

    • I maintain servers with both Hetzner and ThePlanet. I must say that for the money, I am very happy with Hetzner. I simply love their Robot control panel, it has gotten me out of binds a few times. I am actually not the customer, I maintain the server for the customer, but I'm definetely happy with the service.

      I have no complaints about ThePlanet, but nothing special about them either.

    • by mariushm (1022195)

      You forgot to mention the 149 euro setup fee. Basically you're pre-paying for about 30% of the server and then from that 49 EURO about 20 euro is monthly pay for the server cost and 29 euro is colocation/bandwidth.

      Hetzner is OK, no comment here, but you do have to mention the downsides, such as absolutely no erotic content allowed (nudity, art, regular porn - have one person post a NSFW picture on your forum and you may get terminated) and relatively poor speed to some parts of US (I've seen average of 400

      • by mukund (163654)

        Hetzner is OK, no comment here, but you do have to mention the downsides, such as absolutely no erotic content allowed (nudity, art, regular porn - have one person post a NSFW picture on your forum and you may get terminated) and relatively poor speed to some parts of US (I've seen average of 400 KB/s to Texas)

        I did not know that. We run a company website, so this should not be a problem. However, we do run public forums. I wonder how _anyone_ can enforce any rules about posting in a forum. Even if you were to delete offending posts, there is still the time between when it was posted and when it was deleted. If they are policing, I hope they do it with a large grain of salt. This restriction about ordinary porn is very weird though. Is there something in German laws which disallows it?

    • by zero0ne (1309517)

      How is the company for hosting US based sites latency wise? Looks like ~120 ms pings from Eastern US.

      • by mukund (163654)

        Not sure. I live in India, so most of the internet has worse latency than that. Germany is closer as long as we don't get routed through Singapore and the Pacific, kinda like touching your nose around your head. :) However, 120ms is not something I'd call bad for ordinary use. We use interactive SSH shells from here, and it feels good. If you are running something time sensitive like stock trading, maybe then you'd need something closer.

  • by multipartmixed (163409) on Sunday December 12, 2010 @09:46AM (#34528412) Homepage

    I'll tell you exactly what's going on, I bet.

    This is simple. SoftLayer sells bandwidth to UK2. UK2 sells to the CDN.

    Now, SoftLayer charges 5 times what UK2 does for the same bandwidth. UK2 is clearly in the over-sell-the-bandwidth business.

    Whoever came up with that business model imagined normal website usage, not a CDN. When they were going through the books last week, they noticed they were bleeding serious (and probably dangerous) amounts of cash to one customer. When they looked at the customer, they said, "Holy shit! They are basically re-selling our service! They are leeches bleeding us dry!"

    (normal website usage normally has a peaky usage cycle, CDNs can probably maintain a much flatter line -- and the area under the curve is probably where UK2 pays SoftLayer)

    So, SoftLayer says, "Shit! These guys pissed us off and are costing us big time money! Get them off the network! Update the TOS to get right of them and use the we-can-change-it-to-suit-us clause to do it now!"

    This is a little bit like your local ISP discovering that you are selling WiFi to all your neighbours for a quarter miles around -- they are going to turf you if you refuse to stop, even if they didn't think to add that as a bad behaviour in their TOS.

    (And notice that the NOC poster did say that UK2 said they would take them back if they stopped being a CDN)

    • by sjames (1099)

      Fine and dandy, but surely they could make some effort to minimize the damage to everyone involved. They were apparently offered more money and refused cold. They COULD have done something like accept enough money to cover the loss and then give a reasonable notice to terminate the account.

      Of course they could also stop the sleazy practice of advertising a deal better than they actually intend to provide and hoping all of their customers over-estimate their needs.

  • I remember that name mentioned the last time one of these stories about fucking over a downstream service provider came up. It was only a few weeks ago too.

    If two of these events happening so soon in succession isn't a big enough warning sign for their other customers to start running, then nothing will be.

    • by xnpu (963139)

      Midphase is also part of UK2. And yes, they appear to be "cleaning up" a number of high bandwidth sites lately.

  • by PhrstBrn (751463) on Sunday December 12, 2010 @01:32PM (#34529392)

    I read this story and I'm honestly not shocked.

    When you see "unlimited bandwidth, unlimited storage for $4.99/month" shared hosting providers, do you think you're going to be able to create a file sharing service on their servers, and not be terminated?

    In the same token, do you think a dedicated hosting provider who does the same thing with their bandwidth is going to let you do the same thing? Of course not.

    I think anybody who is in that industry by now should realize that if you actually try to use all of your oversold bandwidth month over month, they're going to terminate you for it. How many more years is it going to take people to realize the "too good to be true" is just that - too good to be true?

    This is a non-story. If you're with SimpleCDN, I would be looking at other providers right now, as they apparently have no clue what they are doing. If they actually had a clue, they would have realized that using over-sold bandwidth would probably get them thrown off the network eventually. They would have invested in backup servers on other networks, and when that gravy train ran out and the plug was pulled, their blog post would be more along the lines of "thanks for the fish".

  • it is an object lesson in not putting all your eggs in one basket (or even two!).

    If I wanted to run a CDN, I would want multiple providers (not just multiple locations with one provider) in order to insure redundancy in case of business issues like this.

    Sure looks crooked, though.

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