
Ask HN: Why is bandwidth so expensive? - cmorgan8506
I&#x27;ve been creating video content lately and quickly realized how expensive video hosting ia due to bandwidth.<p>I&#x27;m curious why bandwidth is so expensive.<p>Also, do you think bandwidth costs are likely to rise or fall in the future?
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chatmasta
I've gone on rants about this in the past, but I'll keep this one short: it's
only expensive if you're purchasing data transfer from cloud providers and
paying per-GB.

For an illustrative example, imagine you have a 1 Gbps (gigabit-per-second)
transit line that you are saturating at 95% (~972 Mbps) 24/7\. Over a month,
you will push 312,075 gigabytes (312 TB) over that line. Amazon transfer
pricing is a bit complex to calculate exactly, but for 312 TB you would pay
roughly 0.07 per GB for a total of nearly $22,000.

You can rent a 1 Gbps line for under $500 per month.

Think of it like buying a pipe. You can either rent the pipe, or access to the
pipe. If you rent the pipe, you're buying IP transit. If you rent access to
the pipe, you're buying data transfer. When you rent the pipe, you pay based
on its diameter -- the _capacity_ of what you can fit through it. But when you
rent access to it, you're charged by how much you put through it.

IMO, this price gouging is the _single biggest problem_ with cloud providers
and also leaves a hole in the market. The cloud is pitched as elastic, but
it's only elastic so long as your business is not bandwidth constrained. For
example, you would not be able to build a competitive CDN or VPN network in
the cloud, because you cannot charge your customers for data transfer since
your competitors do not charge like that. But you have to pay for their data
transfer, even if it all fits within capacity that you could provision for a
40th of the cost.

I've been interested in this market for a long time. A few years ago I was
pitching a startup that invovled this idea. It never came to fruition, but I
do have an (unfinished) slide deck that might interest someone:
[https://docs.google.com/presentation/d/1BJICGRhDL95vdBFg0ZE8...](https://docs.google.com/presentation/d/1BJICGRhDL95vdBFg0ZE8EBNk_B3KbITMS2iYPnLGKHo/edit?usp=sharing)

If anyone is working on this problem or wants to discuss it, send me an email
as I've got a _lot_ of thoughts on the matter and will be working on a project
in this space within the next year.

~~~
cmorgan8506
I think this answers my underlying curiosity. I'm still surprised that no one
has come out with a low cost solution that would drive the prices down though.
The barrier to entry, which is cost like you mentioned in your deck, must be
fairly large.

~~~
chatmasta
Exactly. The barrier to entry is not the cost of a single line. It’s the cost
of provisioning a global network where each server has a line with sufficient
capacity.

If you’re bootstrapping a CDN company, for example, you can’t just start with
a single server. You need the global footprint as a selling point. But since
you can’t provision that bandwidth elastically, you’re going to have a monthly
bill of roughly $1k per POP as soon as you start the company, significantly
reducing your runway.

The reason there are so few solutions is because the status quo is charging
$/Gb, it’s a huge source of income for cloud providers, and it makes traffic
engineering significantly easier because users have incentive to minimize
bandwidth costs.

~~~
cmorgan8506
Definitely seems like a market opportunity. Did you find any interest when you
were pitching?

~~~
chatmasta
I never fully pitched it. That slide deck was mostly to sort through the ideas
I had at the time and try to identify some fundamental truths of the market.

The product I'm interested in building is basically a bandwidth marketplace.
It's a hard problem and I've been thinking about it for a while. In college I
researched "TorCoin" for my senior thesis which explored the possibilities of
a proof-of-bandwidth cryptocurrency. I know some ICO's are working on this now
but I'm really skeptical the idea can work without a killer product in the
hands of users driving adoption. That's the product I want to work on. I'm
still figuring out exactly what it is, but I've been thinking about this kind
of thing heavily for the past 5 years and feel pretty confident I can execute
if given the right time, team and funding.

~~~
cmorgan8506
Really interesting. Thanks for the info!

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jtchang
IP transit is pretty cheap and is expected to continue to fall in the future.

For example here:
[http://henet.p2knowledgebase.com/view/short_post/WnL8B](http://henet.p2knowledgebase.com/view/short_post/WnL8B)

You are looking at 1Gbps-on-GigE of $380/mo.

You can run that 24/7 (sometimes they bill you at 95th percentile) but this
looks like it is flat rate.

So all the data you can transfer at a 1Gbps pipe.

~~~
dmannorreys
Jesus, I can get that in Sweden for $100/mo. I've heard of the higher rates in
the US, but I didn't expect the difference to be that much.

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z3t4
An cable long enough to cross the Atlantic cost a lot. But you can also get
10Gbit dedicated line for $1000 /month with ip transit, so I don't think it's
too expensive. The more bandwidth you need the cheaper it gets per Mbit. For a
startup I suggest going peer-to-peer (like the bittorrent protocol) to
distribute your content. Note that you can still charge for it. That's what
Spotify did in the startup. With peer-to-peer it uses the user's bandwidth to
distribute the content, so that you do not have to pay for the bandwidth.

~~~
cmorgan8506
Peer to peer is an interesting thought. I'm curious how that would work with
video hosting. Will have to read into it. Thanks!

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stephenr
Please learn the difference between bandwidth and data transfer.

Bandwidth is a speed, data transfer is an amount of transferred data.

Yes I’m aware that a lot of hosting companies show it as “bandwidth”. That
doesn’t make it right.

Bandwidth is like the diameter of the water pipe coming into your house. Data
transfer is the like the number of litres/gallons sent down that pipe, and
measured by the water meter.

It’s baffling and depressing to me that so many people in this industry get
this wrong. It’s like the tech equivalent of the word irony.

~~~
cmorgan8506
I appreciate and understand the difference but like you said, most hosting
companies use the term bandwidth to describe their data rates. So it makes
more sense to discuss it using their nomenclature.

Also, if you want people to listen to you, try being a little less
condescending. You can be informative while not sounding like everyone else is
dumber than you. Your approach to "educating" makes anyone who didn't know
what you are trying to explain feel incompetent. I'm not sure what the benefit
of that is for you, but you might want to reassess your approach.

The tech industry is difficult enough to navigate. Why not try and be a little
more welcoming?

~~~
stephenr
> most hosting companies use the term bandwidth to describe their data rates.
> So it makes more sense to discuss it using their nomenclature.

a) if you said to _any_ hosting company, "I need X GB/TB of data transfer
allowance" they would know what you mean.

b) given that you're talking about a video hosting site, where data transfer
speed is likely a large contender in performance, I'd be surprised if you _don
't_ factor _actual_ available bandwidth into the decision making process.

So how do you have a technical discussion about the cost of your IP
connectivity, when you're using the same term for the speed and the amount of
data?

> try being a little less condescending

You asked about a technical aspect of hosting a web site, using one very
specific technical term, to refer to another, related but different aspect of
the matter.

In response, I asked you to learn the difference between what you wrote, and
what you likely meant, explained what each means, and gave an analogy using
plumbing references.

I have zero idea who you are, or what your background is. If you are primarily
involved in the business or even the finance side of a company, it's likely
you _wouldn 't_ know that 'bandwidth' means speed not an amount of data.

> Your approach to "educating" makes anyone who didn't know what you are
> trying to explain feel incompetent.

Given that you claim to _know_ the term is incorrect, and still use it
incorrectly, I accept no responsibility if you feel incompetent.

> The tech industry is difficult enough to navigate.

And deliberately using technical terms incorrectly is the way to fix that, is
it?

~~~
cmorgan8506
I'm not debating whether you come off as condescending. I know the answer to
that question. Even if you were right, which you are, I don't appreciate your
input because of the way you present yourself.

See how that works? You could be the smartest guy on the internet and I still
would't listen to you. Because I don't like the way you conduct yourself.

> It’s baffling and depressing to me that so many people in this industry get
> this wrong. It’s like the tech equivalent of the word irony.

People like you make the industry worse for everyone.

Cheers!

~~~
stephenr
> You could be the smartest guy on the internet and I still would't listen to
> you.

That's fine, you don't have to listen to me. You've acknowledged that my point
is correct, and that you're more worried about how you feel I said something,
than the substance of what I said.

Given that you asked a technical question, I'll take "correct" over "warm and
fuzzy", Every Fucking Time.

People literally pay me for advice and some then choose to ignore it, why
would I care that you choose to ignore it when I offer it for free?

> People like you make the industry worse for everyone.

No, people like me make people like you _feel worse_ , because I follow this
crazy idea that words have specific meaning.

It's people who shy away from telling someone they're wrong, or that their
idea is fucking awful, that make the _industry_ worse.

~~~
cmorgan8506
> It's people who shy away from telling someone they're wrong, or that their
> idea is fucking awful, that make the industry worse.

You can tell people they're wrong without being a douche about it. That's all
I'm saying.

~~~
stephenr
There was no 'douche'-ness _intended_ in the original comment.

If you've misread my _text_ as having some non-existent emotion or tone, I'm
sorry but I can't help that.

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WhiteOwlLion
What is expensive?

You can find places like OVH or Online.net that has dedicated servers with
"unlimited" bandwidth. Cost is far less than you'd find with the major cloud
services. I had a 10Mbps dedicated server for several years on online.net
serving 2-3 TB of video per month. Unless you get hammered with many requests,
SATA might be enough, while SSD will obviously offer better performance.

~~~
cmorgan8506
Thanks for this. I think maybe I've been barking up the wrong tree with "video
hosting" services which appear to charge a significant premium on data
transfer.

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stephenr
Aprt from my mini-rant, data transfer charges vary a lot by host.

AWS for example, have ridiculously high charges.

Can you give some rough figures of how much data and how much you’re paying?

