Comment by minhazm
4 years ago
Is it really price gouging for bandwidth? Or is bandwidth just really expensive in general? I honestly don't know. I would assume if it was actually much cheaper one of the cloud's would undercut the other to get customers.
It's absolutely price gouging. I'm not going to rant about this for the 100th time, but at least I'm in good company [0]. Do the math on the cost you pay if you saturate 1gbps for a month vs. the cost you pay for 1gbps IP transit at basically any colocation provider.
Really this is the secret sauce of the cloud. Create new abstraction layers where you can charge for logical separation on a physical basis. First VMs, then containers, then serverless... Would be cool if somebody did it with bandwidth (looking at you, Cloudflare). Why can't I buy an elastically sized pipe? Why do I need to pay for the stuff I put through it instead of reserving a size for the time I'll need it?
[0] https://twitter.com/eastdakota/status/1371252709836263425
That Twitter thread is only including pure bandwidth. What about all the highly redundant networking equipment ( firewalls, routers, switches, Nitro offloading, DDoS protection, attack detection), software for all those abstractions you get ( VPCs, subnets, security groups, vpc peerings, Elastic IPs etc. ) and engineers? None of what i listed you pay for directly, and bandwidth seems to be the most reasonable product to lump it all in.
It's like going to a restaurant and complaining about the price of steaks because beef should cost a lot less. There's a ton of other things involved, and yes, they probably have a decent margin, but not as much as you initially imply.
AWS has advantage due to economies of scale. (And naturally some disadvantages and challenges due to sheer size, which increases fixed costs, but that means that they can't easily downsize, which doesn't apply since they are still growing at an incredible rate.)
So they should be able to reach the lowest amortized cost for bandwidth with all of those costs included.
They price bandwidth so high because they can and they are still growing.
boy howdy, with all the flak i hear about this and the awesome talent in tech, you'd figure an entrepreneur or 1000 would take a stab at this, make it better, charge less. apparently there's gazillions to be made by even charging 50 percent of what AWS does.
so, when should we expect this gloriously efficient competitive market to kick in to action?
my guess is that the AWS ecosystem, despite "price gouging", is simply the best and will be because this is really hard, non-glorious engineering, where solid reliability actually matters. anyone who wants to can go ahead and co-lo, so, whatever. people who want cloud will pay, and those who can't or won't, will not.
There's tons of businesses that are happy to charge less for bandwidth; so it's clear Amazon (and some of the other high tier cloud services) are overcharging on this maybe by a factor of 10, although since transit bits are not all equal, someone with more detail could make a case that the overcharging is less.
It's easyish to compete on bandwidth costs, but Amazon has a lot of other features many people want; it's harder to replicate all of those, especially the part about having a long history of operating such services and not making a lot of changes to make things more expensive or otherwise more difficult. Having to pay a much higher than market price for an easily replaced good in order to get a good that's less easily replaced is textbook anti-competive bundling.
If your bandwidth usage is high enough, maybe it makes sense to send it all through AWS direct connect, and pay for transit yourself; although even then, the AWS direct pricing seems a bit high.
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Your point that "AWS has a bunch of other benefits to where people just accept the bandwidth costs so they can leverage those other benefits" doesn't actually counter the original claim that "the bandwidth costs are outrageously overpriced".
You're replying to a comment that includes a tweet from the CEO of Cloudflare, which is quite literally providing that competition with free bandwidth and an increasing suite of computing products.
There are plenty of other platforms as well, like Digitalocean, that have much lower bandwidth pricing.
What competitive market?
Nobody else can give you bandwidth out of Amazon data centers. Amazon's advantage is having a ton of services that work together, and they take advantage of it to price gouge on bandwidth.
If you're buying a standalone CDN service you can get massively better rates.
You're free to go build your own cloud and sell it for cheaper. I'll wait.
I'm kind of surprised that people are this upset about how much AWS charges for bandwidth. They may charge more for bandwidth than a colo would but they're not a colo. A colo you get a network port and -thats it- you provide everything else yourself, with its attendant cost, and you roll that up into your total bill.
If a colo provides you a 1 Gbps connection if you use less, you don't get a refund. And most of the time you don't get 24/7 saturation, or you get charged on some 95th percentile billing, and their networks are almost always oversubscribed anyways.
AWS is trying to disincentivize using it as a dumb pipe. They want you to use it smartly and if you just want to push static data there are much more cost effective ways to do it, such as CDNs, which are more cost effective for both you AND AWS.
Comparing AWS bandwidth costs and Colo and even other clouds like Oracle isn't fair because different things are associated with that cost.
It really is price gouging - bandwidth is actually cheap.
A couple of comparisons:
Oracle Cloud give you 10TB of bandwidth for free, with overage charged at around €7.5/TB.
You can rent a VPS from the likes of Hetzner, and they will throw in 2-20TB of bandwidth for free, with overage charged at something like €1/TB - AWS charge an eye-watering €125 for each TB!
I think the reason the big 3 (AWS, Azure, GCP) still charge such huge amounts is that they profit so greatly from it, and there is more than enough business to go round.
You know you're greedy when Oracle is cheaper
> I think the reason the big 3 (AWS, Azure, GCP) still charge such huge amounts is that they profit so greatly from it, and there is more than enough business to go round
Or that their networking does vastly more and is of better quality? Hetzner can't provide you with everything around a VPC that AWS do. Just a tiny example - peering VPCs across regions, which is free.
I would say that it's two simple factors:
1. High bandwidth charges are an effective form of lock-in. Once your data is there, it's prohibitive to move it out again.
2. Bandwidth use is very poorly understood in many businesses, compared with simpler metrics like storage, memory, and CPU. AWS can run razor-thin margins on things that people easily compare to on-prem or VPS-style offerings, and then make the money back in areas like network traffic, fine-grained monitoring, and other items that as less obvious.
I totally agree, but was stunned to see DigitalOcean charging $0.10/GB for outbound transfer for their new (quite cool imo) apps service. You do get 40GB-100GB included, but it means it's unusable for bandwidth heavy apps. They include 1TB (which is pooled across all VMs) and 0.01/GB on their standard platform.
Yeah, I think Digital Ocean are really taking the piss there - proven by their existing $0.01/GB pricing, as you mentioned.
I reckon DO have seen the big providers getting away with it, and they want a piece. Why wouldn't they, when there is apparently so little pushback?
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Why would players in an oligopoly undercut each other when their implicit agreement around pricing makes all of them richer? Also, second tier cloud providers like Oracle give deep discounts and still can't compete with AWAZGO so pricing isn't necessarily a main competitive advantage.
Oracle's problem is that nobody wants to work with Oracle. If I was managing a high-bandwidth service I would avoid Oracle Cloud purely to avoid legal risk to my clients.
While I agree that's why no one uses Oracle, corps not competing for price at the tier 1 provider level still isn't great for the consumer/market, which is what I think the original commenter was getting at.
Keep in mind bandwidth gets cheaper as AWS gets bigger. If you are some random tiny colo provider, people don't necessarily care to peer with you unless you pay them for the privilege. If you are originating 20% of internet traffic, now people need to peer with you or their customers won't have a great experience.
If you think AWS is expensive, give AZURE a go and be appalled.
IP transit costs something like $350-$700/mo for a Gbit. Amazon are certainly getting better rates, so even with equipment costs I doubt they're spending much more than $0.005/GiB. Their pricing starts at $0.15/GiB. (Not to single out AWS, the other big providers are much the same.)
I'm below $100/1Gbps 95% with more than one provider as a small player
That's sounds like a great deal: you're paying less than half of Hurricane's advertised minimum price. And I had understood HE were a mid/low price carrier.
Can I ask, are you in a data center? US or Europe?
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