At any reasonable scale, S3 bandwidth is still a magnitude more expensive than you would pay at an aggressive dedicated server company like ServerBeach, ThePlan

At any reasonable scale, S3 bandwidth is still a magnitude more expensive than you would pay at an aggressive dedicated server company like ServerBeach, ThePlanet, 10tb.com, or SoftLayer. It's also even worse when you compare it to discount bandwidth offerings like Cogent's $1,500 for a GigE (which comes out to $0.0075/GB) or Hurricane Electric's $3k price for a GigE connection. What Amazon is really doing here is the classic ISP inbound/outbound juggling act amongst public peers. In order to maintain a peering relationship, especially at the scales that Amazon must see with it's cloud services, providers really need to maintain an equitable inbound/outbound ratio, otherwise agreements become void and they actually start charging each other.