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How exactly do you save them money? If they connect from Iceland to Iceland, they haven't changed their point of origin right? So any use of overseas servers would still cost them?

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Usually, home users would by a fiber/dsl connection which includes an unlimited amount of domestic bandwidth and a set amount of "international bandwidth", typically from 10GB to 2000GB. When exceeding this quota, users would typically be billed somewhere around $15 for each 10GB increment they went over the quota.

The size (measured in GB) of the international bandwidth "addon" determined the price of the connection far more than the speed of it.

By hosting my servers in Iceland, the traffic through the VPN would not count towards the "international bandwidth" of my users. And since I was hosting in datacenters, I would be paying less for the bandwidth than at a typical home connection.

Ah gross, that's pretty messed up. I guess I have s romantic view of Iceland where they wouldn't let that cheesy kinda pricing to exist. Or especially that they'd fight your company. Insane.

Indeed. But there are also dual pricing schemes in datacenters. They don't want you to peer with RIX (Eeykjavík Internet Exchange) and charge those who do a higher price (hence forcing one hosting provider to change their routing.

You're a hero. That is an awesome idea.

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