It is no longer news that RAM prices are high. The AI surge has DRAM producers like Micron focus on HBM (High Bandwidth Memory) to serve AI hyperscalers over the DRAM (Dynamic Random Access Memory) used by ordinary consumers and small businesses. Consequently, for instance, servers which used to cost $2500 on Newegg now cost $5000. RAM alone is $2500 now. While most headlines focus on the DIY PC building community, less is said about small VPS (Virtual Private Server) hosts like mine. If we continue to focus on AI at all costs, small VPS Hosting businesses like mine might die out the way small ISPs died in the 2000s because of Big Telecom lobbying. So why should we care? What the 2000s taught us During the 90s internet boom, many dial-up ISPs (Internet Service Provider) popped up. These ISPs used voice lines from the local phone company, which, in the US, were mostly “Baby Bell” firms such as SBC (now AT&T) or Bell Atlantic (now Verizon). “Baby Bell” When the shift from dial-up to broadband started to be incorporated by the Baby Bells, Bill Clinton’s FCC mandated in 2000 that the Bell firms had to lease out their copper DSL (Digital Subscriber Line) wires to other ISPs for a nominal fee, also known as “unbundling.” This made sense in the US since taxpayer dollars were used to build those very Bell networks. Regulators in other countries also did the same. This prevented a phone or cable company from being a monopoly. the Bell firms had to lease out their copper DSL (Digital Subscriber Line) wires While unbundling survived in Europe, the subsequent FCC took a different path: one which ultimately killed 7000 rival ISPs, raised prices, and hurt Net Neutrality a decade later. killed 7000 rival ISPs Line sharing between Bells and ISPs was never fair to the latter. Small ISPs were forced to charge higher prices than cable and phone companies due to high line fees. But instead of leveling the playing field, thanks to heavy lobbying from Bell firms, the Bush FCC reversed Clinton’s decision and allowed Bell companies to not share their DSL or fiber networks. Bell companies to not share their DSL or fiber networks However, cable companies like Comcast never had to share their networks, despite having become near-monopolies a decade later. But, unlike Bell networks, cable networks were privately funded. Bell firms, however, refused to upgrade their lines during this period despite promising better fiber networks if sharing was killed, due to the wireless boom. It’s only the recent fiber and 5G spurt which broke cable’s monopoly. cable companies like Comcast never had to share their networks While rival DSL ISPs could build their own networks, as Sonic in California has done, many more exited broadband and became Microsoft partners. They lacked the know-how, or funding, for building fiber. And, even if they had the know-how and funding, they wouldn’t stand a chance against Big Telecom lobbyists. Big Telecom lobbyists Worse yet, despite flip flopping on Net Neutrality, subsequent FCCs from both parties institutionalized Bush’s abandonment of line sharing since the firms needing line sharing went out of business or pivoted. subsequent FCCs from both parties institutionalized Bush’s abandonment of line sharing How this compares to VPS hosts today Yes, the 2000s are back for fashion and music, but I really hope the death of mom-and-pop tech providers stays in the noughties. However, today’s scenario is different from the dot-com era: Bell companies legally had to share their lines, but now DRAM producers don’t legally have to produce DRAM.
Line sharing wasn’t essential for modern tech. DRAM is.
Bell companies intentionally killed small DSL ISPs. DRAM companies might unintentionally hurt small VPS hosts because of their focus on Big Tech.
DSL ISPs used “unbundled network elements” which Bell companies would not provide on their own. VPS hosts use 	standard servers and services like colocation, also used by other industries such as banks, airlines, et al.
Network unbundling is controversial. While I favor this approach, many don’t for legitimate reasons. Bell companies legally had to share their lines, but now DRAM producers don’t legally have to produce DRAM. Line sharing wasn’t essential for modern tech. DRAM is. Bell companies intentionally killed small DSL ISPs. DRAM companies might unintentionally hurt small VPS hosts because of their focus on Big Tech. DSL ISPs used “unbundled network elements” which Bell companies would not provide on their own. VPS hosts use 	standard servers and services like colocation, also used by other industries such as banks, airlines, et al. “unbundled network elements” Network unbundling is controversial. While I favor this approach, many don’t for legitimate reasons. Despite this, telecom companies made a bet on only retail ISP customers and got what they wanted. And it forced broadband customers onto one-size-fits-all solutions instead of also having specialty providers. This could also happen to VPS hosting. AWS isn’t suited for everyone. For instance, media streaming, VPN, and Tor relays aren’t suited for big clouds due to high bandwidth costs. I personally run Tor relays, and there’s a reason why I never ran them on Azure when I worked for Microsoft. On my VPS host, I have 16. Other customers have even more. Unlike DSL ISPs, many small VPS hosts will survive. Maybe at higher costs or a different focus. But if our industry dies out, it will hurt ordinary developers and sysadmins if the only options become pricey Big Tech clouds. A cash-strapped small business or college student will either have to avoid VPS hosting or use the subset they can afford.

The writer has or has previously had a business relationship with companies mentioned in this article.

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AI Ate the RAM: How HBM Is Pricing Small VPS Hosts Out of the Market

AI Ate the RAM: How HBM Is Pricing Small VPS Hosts Out of the Market

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