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Let's say I have a software technology (new HTTP compression, new codec, ...) that can reduce network traffic by X%.

I would now like to license / sell this technology to certain cloud providers. As part of that offering I'd like to estimate how much traffic costs them, to find a good price point.

Looking at existing cloud providers,

  • AWS is like $0.03 / GB (at 1000 TB per month)
  • Azure maybe like $0.05 / GB
  • ...

However, these are "consumer" prices, not costs. What I'd rather be interested in is the cost calculation for cloud providers which run their own infrastructure.

In other words, if I build my own server park and consumer cloud service "Yetflix", how would I value a gigabyte?

Edit: to clarify, I'd be interested in both actual 2021 costs, as well as general cost considerations (e.g., how many kWh is a GB? how does pricing work with the company that runs a network cable in my datacenter? ...)

left4bread
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  • What would a cloud provider do with your technology? It's not their traffic, they aren't allowed to mess with it. It belongs to their customers. – user253751 Jan 11 '21 at 17:37
  • Yes, in my example it is their traffic. A "Yetflix" server both produces data, and also provides a client that consumes it. The moment Yetflix has to pay for traffic there is a strong incentive to reduce it. – left4bread Jan 11 '21 at 19:02
  • Right, then you are marketing to Yetflix, not to AWS. – user253751 Jan 12 '21 at 01:06

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I would image that information is highly proprietary. The consumer price may have little to do with the actual circuit costs. They may be used to cover other, unrelated things (e.g., to recoup profits on other services sold as a loss).

The cost for a communications circuit is mostly independent of the amount of actual data flowing over it. But if your idea is some sort of compression algorithm for HTTP, how will you convince browser and application manufacturers to use it? What's their incentive to rewrite their software?

Ron Trunk
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  • We're targeting cloud providers which own both ends, the compression on the server, as well as client code to perform decompression. Incentive would be reduced cost (well, hopefully; that's what this post is about). – left4bread Jan 11 '21 at 16:28
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    You're not going to reduce costs, because the cost of a circuit is relatively fixed. You might be able to reduce future capital expenditures by delaying upgrades. That's a complicated calculation. – Ron Trunk Jan 11 '21 at 16:57
  • Are you saying once I built my data center and plugged in all optical fibers 1) unlimited upstream carrier traffic is free of charge and 2) router energy cost is not moderated by traffic? – left4bread Jan 11 '21 at 18:59
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    @left4bread 1) The contract with your upstream carrier will specify the terms for their service, typically based on max BW, not amount of traffic. Note that AWS and others that size have their own backbone, so there isn't an upstream carrier. 2) Router energy doesn't change significantly. – Ron Trunk Jan 11 '21 at 19:53
  • > _contract with your upstream carrier [...] based on max BW, not amount of traffic [...] router energy doesn't change significantly_ Ah, that's good to know, in that case I can understand why the cost would be computed differently. Thanks! – left4bread Jan 12 '21 at 09:51