Hosting: count your servers - Internet host density - Internet/Web/Online Service Information - Column

Communications News, Nov, 1999 by Dan Taylor, Bart Taylor

Because the cost of international telecommunitions is often PROHIBITIVE FOR MANY SMALLER BUSINESSES, the INTERNET PROVIDES a way for these same companies TO CROSS INTERNATIONAL BORDERS and time zone in a none-real-time form of information sharing.

The United States has one of the highest telephone densities in the world, with over 50 telephone lines per 100 people--this per capita measure is used to generate a statistic called "teledensity." The International Telecommunications Union (ITU) studies and publishes teledensity figures to measure global telecommunications development.

Teledensity measures the growth of local, regional, or national communications infrastructure--the ability of a country to do business and to adapt socially to the change and dislocation of distance. Within the U.S., we take the telephone for granted, because it eliminates distance; it allows us to communicate effectively with other businesses, whether they are down the street or thousands of miles away. The same holds true for our customers, to whom we give 800 numbers they can call at any time of the day or night for prompt and efficient service.

Within national and regional borders, teledensity provides a good measure of how broadly developed a given telephone infrastructure truly is. In the global arena, it also provides a valuable index used to compare economic development. In those countries with low teledensities, businesses find it difficult to communicate effectively. Not surprisingly, these same countries often have difficulty growing their economies. Teledensity measurements apply most accurately as a measure of the local and regional impacts of communications--and are not as directly linked to global economic factors.

MEASURED SUCCESS

In 1995, the ITU introduced a statistic to measure the growth of a new communications trend--the Internet. This statistic measures the number of Internet hosts per capita in a given country or region. Essentially, the ITU is trying to quantify how countries and regions are adapting to this new medium of communication. Although the host statistic may look much like the teledensity figure, the Internet host statistic actually provides a measurement of two things: services density and the global reach a given region has, in the form of Internet infrastructure.

Taken alone, the number of per capita Internet host computers is an indicator of how well a region is adapting to Internet technologies. It is actually an indicator of services density--of how widely deployed Internet services are.

Teledensity and Internet host density are complementary statistics. Implicitly, Internet host density measures the adoption of an inherently global medium of information sharing. However, most businesses today still care quite a bit about teledensity, because the telephone and facsimile are effective means with which companies can do business, either directly with their customers or with each other. In addition to in-person meetings, the telephone remains a primary form of business communications.

From a business perspective, like teledensity, hosting services density indicates how well-suited the Internet is for business-to-customer interaction. In fact, much of the investment in the Internet is driven by demand for a more cost-effective form of customer interaction. Over the Internet, customers can access a broad range of services, including:

* Corporate information;

* Product literature;

* On-line catalog;

* Order status; and

* Customer care.

Companies can provide these information services--as well as electronic commerce--for a far lower cost than in a telephone-based call center. Current estimates for the cost of a transaction in a call center place it close to $15, whereas on the Internet the same transaction may cost less than a dollar.

Internet hosting offers a rich set of capabilities to complement voice services, but it has also evolved into a broader set of services: the Web, e-commerce, FTP, chat, e-mail, and enterprise applications hosting. This rapidly evolving set of application services promises companies of all sizes a greater ease of access to information-technology capability.

THE EFFECTS OF HOSTING ARE GLOBAL

In the context of the Internet as a global communications infrastructure, the number of per capita Internet hosts is a metric for globalization. Because the cost of international telecommunications is often prohibitive for many smaller businesses, the Internet provides a way for these same companies to cross international borders and time zones in a non-real-time form of information sharing. Just as Telex and facsimile have made it possible to do business at all hours of the day and night, the Internet introduces an even more pervasive, robust way to do business.

For businesses, teledensity measures the effectiveness of the telephone as a business medium locally, regionally, and nationally. Internet density means more than that. It defines how well a business can communicate with its partners and customers--at home and abroad. The hosting index reflects a new way of looking at the international telecommunications race, in seeking to measure and evaluate the importance of global services growth.