Hosting is a lot more expensive in Australia.. To give you some idea, for wholesale bandwidth alone we pay in the order of 20times what it costs in the US or Europe.

The reality is we're a long way from everywhere. When we connect into the US we need to run the cables 15,000kms and we get to pick up the vast majority of the costs to do so. Then when you try split that cost over 22 million people versus the 300million++ in the US, you end up with economies of scale which are way out of whack with what your familiar with. :)

To give you some idea, the vast majority of residential DSL connections cost in the order of $100/month .. and only come with 150GB data allowance. :)

Depends at what level. Dedicated isn't too bad and there are some VPS providers who have reasonable prices e.g. http://www.mammothvps.com.au/home/index

If Amazon EC2 does come to Sydney as expected then I would expect a bit of a shakeup of the industry.