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What are bandwidth costs? This comes up again and again, people see HE.net / Cogent / Level3 / Hibernia / NTT whatever offering 10gig handoff IP transit at a co

What are bandwidth costs? This comes up again and again, people see HE.net / Cogent / Level3 / Hibernia / NTT whatever offering 10gig handoff IP transit at a colo neutral location for X per month and somehow determine the true cost. When I suspect the reality is that much of cost is invested in routing equipment both internally and externally, evolving SDN and all the goodness it affords, being able to offer SLA per instance in terms of mbit that can be pushed, being able to mitigate DDOS, hiring top network engineers and researchers, being fully redundant across multiple providers and protected circuits rather than just a lonely hand off - or in GCP case building out the network themselves with multiple SLA tiers, being able to mitagate network issues quicker than a PagerDuty alert at a banwidth blender. Granted I'd say there still probably cushioning in there but judging network costs by comparing to a 10gig handoff at a random colo neutral, or blender, or OVH/Hetznet commodity servers, or Linode/Vultr/DO seems unfair in my opinion.

martinald 9y ago
I totally understand that but the price hasn't dropped in what, a decade? My home internet connection (which includes a shedload of last mile costs laying fibre to my apartment) has went from 2mbit/sec to 1gig/sec (for less money in real terms) in a similar timespan. I'm not expecting it to be at the cost of a 10gig cogent connection at LINX, but some drop makes sense. DO/Backblaze pricing seems to be more on the money. Keep in mind these provides also do charge on top for a lot of other networking services (VPCs, NATs etc) which often can really add up, so I'd expect some of the SDN capex to be absorbed by that.
mrep 9y ago
I met a network engineer for amazon about a year ago and I brought up the prices since I had heard about them being expensive here on hacker news. He laughed about it and said it was one of their most profitable departments with like a 90% margin.
- corobo 9y ago
  Gotta be able to negotiate wiggleroom somewhere when the Netflix-types come knocking
manigandham 9y ago
Those other core networks and ISPs arent exactly cheap to run either, but they are doing fine and the price differential is close to 100x.
raiyu 9y ago
Actually you are a bit mistaken. The larger the provider is the more they are able to negotiate a lower rate from transit providers. The larger a provider is the more peering they get which reduces the total amount of bandwidth they pay for in general. Then when you consider the cost of the equipment vs the cost of the throughput you will see that as a network becomes larger, network equipment isn't the main cost driving factor, nor are network engineers. Simply put Amazon is over charging customers by 10x on bandwidth fees. If we are able to sell bandwidth to customers at $0.01 cents per GB profitably, which accounts for paying for transit, network equipment, and network engineers, turning a profit for reinvestment, then AWS should be offering you a price that is 10x less than $0.01 per GB because their bandwidth cost should be significantly better than ours. Instead they are charging you a 10x higher price.

martinald 9y ago

I totally understand that but the price hasn't dropped in what, a decade? My home internet connection (which includes a shedload of last mile costs laying fibre to my apartment) has went from 2mbit/sec to 1gig/sec (for less money in real terms) in a similar timespan. I'm not expecting it to be at the cost of a 10gig cogent connection at LINX, but some drop makes sense. DO/Backblaze pricing seems to be more on the money. Keep in mind these provides also do charge on top for a lot of other networking services (VPCs, NATs etc) which often can really add up, so I'd expect some of the SDN capex to be absorbed by that.

mrep 9y ago

I met a network engineer for amazon about a year ago and I brought up the prices since I had heard about them being expensive here on hacker news. He laughed about it and said it was one of their most profitable departments with like a 90% margin.

corobo 9y ago
Gotta be able to negotiate wiggleroom somewhere when the Netflix-types come knocking

manigandham 9y ago

Those other core networks and ISPs arent exactly cheap to run either, but they are doing fine and the price differential is close to 100x.

raiyu 9y ago

Actually you are a bit mistaken. The larger the provider is the more they are able to negotiate a lower rate from transit providers. The larger a provider is the more peering they get which reduces the total amount of bandwidth they pay for in general. Then when you consider the cost of the equipment vs the cost of the throughput you will see that as a network becomes larger, network equipment isn't the main cost driving factor, nor are network engineers. Simply put Amazon is over charging customers by 10x on bandwidth fees. If we are able to sell bandwidth to customers at $0.01 cents per GB profitably, which accounts for paying for transit, network equipment, and network engineers, turning a profit for reinvestment, then AWS should be offering you a price that is 10x less than $0.01 per GB because their bandwidth cost should be significantly better than ours. Instead they are charging you a 10x higher price.