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.
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
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.
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.
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.
The point is that if you charge absurd prices for what has basically no marginal cost your pricing model is broken and 1) you are excluding customers that are particularly sensitive to this price or 2) you are liable to undercharge other customers that primarily use other services for which you are not charging what it costs you to provide.
For AWS, given the generally inflated prices, it's probably a lot more of 1) than 2).
And it's easy to replicate the water part (after all VPS providers are dime a dozen), the hard part is the food.
There are plenty of other platforms as well, like Digitalocean, that have much lower bandwidth pricing.
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.
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.
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.
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.
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?
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.
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.
Can I ask, are you in a data center? US or Europe?
US.
Some of the larger bandwidth transit resellers like FDC will do Cogent for $0.02/Mbps. They have a marketing site at epyc100gig.net (not an affiliate or employee; just a FDC customer).
https://he.net/cgi-bin/ip_transit_quote is where I'm seeing the $200 number.
I believe that kind of low-for-1G-commit pricing is for their fully owned FMT1/FMT2 US CA facility. You have a lot easier peering in EU (AMSIX, DECIX, etc) that will help compared to the US's love of commercial exchanges like Any2/Coresite/Equinix where peering costs practically more than transit.