In general, overbooking is a term used to refer to overselling, meaning selling more spots than are available. This relates to the seller’s expectation that not all customers will use the services they've purchased or that there will be cancellations. This ensures 100% of available resources are sold, increasing the return on investment. Overbooking is most commonly seen in the sale of transportation tickets or hotel bookings. However, the term is also used in relation to internet connections, web hosting, and VPS services, including both unmanaged and managed VPS.
What is Overbooking?
Overbooking refers to the sale of services beyond real capacity. This process, which involves the resale or reuse of bandwidth or connectivity, is the method used by ISPs. They sell packages with a maximum bandwidth value and a guaranteed minimum, so when the service reaches its bandwidth limit, the service quality for all customers tends to degrade.
Similarly, in web hosting or VPS services, companies offer plans that are unsustainable if all customers use the services at full capacity simultaneously. Although many hosting services advertise unlimited space and transfer, they impose usage restrictions to prevent system overload. This supports shared hosting systems, as individual users' activity must not exceed the general server's capacity.
This practice allows servers to maximize their physical resources, which can be observed in the operation of a VPS. This approach leads to greater profitability for investors and keeps service prices affordable, ensuring that home users of these connections can still access the service.
How Does Overbooking Work?
It is important to understand that bandwidth refers to the volume of information that can be transmitted over a connection in a certain period. This is the amount of data sent per second, usually measured in Mbps. In contrast, throughput refers to the actual amount of information transferred per second. Based on these considerations, ISPs calculate bandwidth per customer to offer services while guaranteeing a minimum level of service, different from the package advertised.
The calculation is made by analyzing the network, estimating the expected number of users, their consumption, and the plans to be offered. The following variables must be quantified:
- Number of users per plan
- Percentage of bandwidth to be guaranteed (usually 10%) or service level agreement (SLA)
- Reuse rate established by the network administrator
Based on these values, it is possible to calculate the CIR (Committed Information Rate) or the guaranteed minimum bandwidth, and the MIR (Maximum Information Rate) or the maximum bandwidth available if all users simultaneously use their CIR. It is important that the CIR does not exceed the capacity of the contracted server.
Additionally, the reuse rate can be 4:1, 8:1, etc. Based on this, the bandwidth required for the plan is calculated by dividing the number of users by the reuse rate and multiplying it by the plan’s bandwidth in Mb. This determines the bandwidth to be purchased from the initial provider.
Benefits of Overbooking
- Service Cost
Since multiple users share the same server and its features, the service cost is lower compared to dedicated systems, as can be seen from the resource efficiency that reduces VPS (both managed and unmanaged VPS) prices compared to VDS.
- Installation
Overbooking services do not require complex installations, as most ISPs already have shared signal routers in specific areas, allowing easy connection of new access points. Likewise, VPS installation is straightforward since it is a virtualization system that doesn't require physical hardware transportation.
Drawbacks of Overbooking
- Signal Stability
Due to the overbooking system, where resources are shared among many users, connections may often be unstable because the service is offered based on assumptions that are not always controllable.
- Signal Variability
The offered and guaranteed bandwidth is subject to transmission peaks in overbooking systems, meaning that signal quality may fluctuate during high-traffic periods.
- Transmission Speed
The transmission speed depends on the server's load and peak usage times. Moreover, many of these systems prioritize upload speed over download speed.
- IP Usage
Overbooking allows only one IP address per modem or router, which may be a significant limitation for large companies needing more IP addresses.
Based on these considerations, it is essential to carefully analyze the internet service you are subscribing to, based on the specific needs you wish to fulfill. While bandwidth overbooking services are the most common, you can access more specialized options with your ISP or opt for better SLA (Service Level Agreement) packages that align with your service expectations. Similarly, it is important to evaluate the benefits of a VPS over a VDS depending on your company’s needs. However, it is also critical to consider whether to choose a managed or unmanaged VPS.
The level of investment will be one of the main factors when opting for a dedicated service. However, service quality is guaranteed, improving the efficiency of business operations, and virtualization processes (such as in managed or unmanaged VPS) can be carried out more effectively.
On the other hand, if your network usage is more domestic and does not require high demands on speed and stability, you may be better suited to the conveniences of overbooking or bandwidth reuse systems, as they can cover most common internet usage needs without requiring significant investment.
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