Comment by kkielhofner

1 year ago

Peering.

Here's how it works:

1) I have a big network and I exchange traffic with another big network. Think of "eyeball" networks like last-mile ISPs (Comcast, mobile providers, etc) where a substantial portion of end-user traffic is going to handfuls of well known networks - Cloudflare, AWS, Netflix, etc.

2) Comcast and Cloudflare say "Hey, I send you X TB/PB/etc and you send me X TB/PB/etc. We both currently pay another provider to route that traffic between us. Let's not do that."

3) In locations where it makes sense they basically throw a cable across datacenters, POPs, internet exchanges, etc. The cost for this is typically extremely low - it's basically a port on a switch/router on each side and MAYBE a "cross connect fee" from the facility. This is usually billed in the tens of dollars/mo if at all. It takes very little time/effort to configure this but of course the details are more complex - multiple ports, multiple facilities, etc.

4) Both sides start routing traffic between their networks over their new shiny direct cables and extremely high speed ports. Faster throughput, lower latency, improved reliability, frees up bandwidth to the transit provider they were using previously, and most importantly the cost of bandwidth between the two networks goes to zero.

This is all well known and publicly available because it's visible in the global routing table(s). Cloudflare, for example[0].

All of the large providers do this and AWS, etc charging in bandwidth per GB (especially at their rates) is more-or-less pure profit.

I have a theory that AWS, etc capitalize on people not really understanding this anymore. AWS is 20 years old - that's an entire generation of CTO/CIOs on down that are completely unfamiliar with these details and think $0.10/GB or whatever is "just what bandwidth costs". It is not.

[0] - https://bgp.he.net/AS13335#_peers

People don’t really and have never fully understood this - and why Netflix using a lower tier provider with bad peering caused companies to … not upgrade their links.