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Bandwidth pricing falls dramatically with bulk. Cogent offered me $0.75/meg for a 3g commit, $0.65 for a 5g commit, and $0.50 for a 10G commit. I know a guy that is getting $4.00/meg on a 100M commit on a 1000M pipe, also from Cogent. (and he chose that over going through me for $650/month for a capped full 1000M pipe) Bandwidth is also a "negotiated good" without a standard price, so what I pay may be rather different from what you pay.

On top of that, bandwidth costs fall... dramatically[1] in competitive markets, and I'm in silicon valley, probably one of the most competitive transit markets. According to the graphs I've seen[1] I'm paying below average, but it won't be very long before what I'm paying is average. I was explaining this to the real-estate guy that owns my data center that was wanting to get in on the bandwidth business (he wanted to get people in for cheap and crank up the price on renewal, like you do with real-estate and data-center space) His response? "but then why would anyone want to be in the bandwidth business?"

I mean, the fiber in the ground? that's like real-estate. the prices go up, the prices go down, eh, whatever. But, the amount of traffic you can push over two strands of fiber? that goes up all the time; I have some old cisco 15540 ESPx DWDM units that can do 16 10GB/sec waves over one pair of fiber. They were awesome back in the day. Modern DWDM equipment? you can get 80 100GB/sec waves on one pair of fiber.

It's irritating, though, as like everything in this industry, you have to negotiate for months to get the "real price" - I asked Cogent for a single, capped 1 gigabit port for $1000/month north of 6 months ago. "Call me back when you can get me a buck a meg" They kept calling me back "how about $3 a meg? how about $1.75 a meg?" I mean, even now, they beat the buck a meg price point, but I had to buy a lot more than I needed (I'm splitting it half and half with another company, at cost, so while the transaction cost was huge, once you factor in the discounted setup fees, well, I am still paying more than a grand a month, but it's still a pretty comfortable fee for me.) I imagine Cogent has spent several thousand dollars of salesperson time, and I /know/ I have spend several thousand dollars of my time on this, and they are charging me rather less than if I had wasted almost none of their time. They even dropped the setup charge down to almost nothing.

And now I've gotta do the same thing all over again with a second provider (most likely he.net) What a waste of time and effort all around. I mean, a little bit? it's kinda fun, I mean, sales people are always ridiculously overdressed extroverts, and in this industry, most of them can pick up on my personality and act in a way that is tolerable or even fun for short periods of time, but I really am an introvert. I mean, it can be fun for a while? but man, I have had like 5 meetings the last two days, between dealing with Cogent and dealing with the people that are buying half the pipe from me. It's exhausting, and I guess I have a hard time seeing how this is the most efficient way to sell bandwidth. I mean, I guess some people throw up their hands and pay the $3/meg asking price, and if they can break even on me, god damn, you wouldn't need many of the $3/meg customers to get really rich.

But then that leads the question: why bother with me? I mean, I'm going to turn around and sell transit very near this cost in a very public way, which will mean that more of those $3/meg customers are going to turn around and ask Cogent for a discount.

I guess they can rely on the fact that, well, I'm a scruffy introvert, and no large corporation will do business with me. Still, I mean, Cogent will let me drop 1G (capped, sadly) ports into datacenters where I don't have equipment for $650/month, and I've been running ads saying I would be willing to sell those at cost (and make my profit off of the difference between the list setup fee, $2500, and what they are actually charging me.) - This was mostly a way to get the higher commit pricing without actually paying for it all.

[1]http://drpeering.net/white-papers/Internet-Transit-Pricing-H...




At the time we were looking at a 2 gb commit...

$4 a meg sounds really expensive, at that point it is almost worth it going up, have room for future expansion and pay less for it, or do you do, and split the BW and cost.




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