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The prices for broadband bandwidth at data centers are sometimes as much as 10x higher than for a typical small business/consumer connection, at least where I live. Now, I understand those are two differend kind of products, but what exactly are the differences? Is it mainly because the bandwidth you get at a data center is guaranteed (CIR), while a consumer offer lists maximal bandwidth (EIR/MIR)? Or are there other factors as well?

(Note: This question is not ideal for several reasons. I posted a new one on this topic which I believe is better.)

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closed as not constructive by John Gardeniers, MadHatter, Greg Askew, Zoredache, Shane Madden Nov 15 '12 at 7:19

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The same reason the red ones cost more than the blue ones. –  John Gardeniers Nov 14 '12 at 9:38
    
@JohnGardeniers are you saying the difference is psychological and ISPs and/or DCs are just preying on their users' incompetence? –  odemarken Nov 14 '12 at 10:46
    
really, if the people who downvoted cared to explain what is so bad about this question, I'd perhaps ask better ones in the future. –  odemarken Nov 14 '12 at 10:47
    
You get an upvote from me to compensate the downs a bit. IMHO this is a legitimate Q. Not very good but average (with this I mean, normally you would not get my upvote but current -2 is not ok IMHO). –  Mose Nov 14 '12 at 11:56
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Are you talking about JUST bandwidth prices, or are you talking about your whole net monthly bill, which is paying for your bandwidth (with multiple providers & multiple physical uplinks), floor space, (redundant) cooling, (redundant) power, 24x7x365 operations staff to make sure the infrastructure stays up, probably a site electrician, etc... ? –  voretaq7 Nov 14 '12 at 17:02
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3 Answers

TL;DR summary: they're not.

As is becoming usual, I disagree, in this case with nearly everyone. Dennis, it's true that colos have SLAs, but most of them are toothless at best, and often amount to no more than a reimbursement of what you've actually paid for the service during the period of the downtime. Such a risk premium is very small, and doesn't explain a major cost increase. An SLA where they will pay back many times more more than you've paid if the downtime is long enough, and where the definition of "long enough" is comfortably short, is the only kind of SLA that justifies a significant risk premium.

I do agree that guaranteed vs. overcommitted bandwidth will impose a pricing difference.

But moreover, I disagree with the original poster. Odemarken, you don't say where you live, so it's hard to take this analysis to you, but in the UK at least bandwidth does not cost more in the DC. For a comparison, my home ADSL service gives me 30GB of throughput a month for £20, give or take; overage is charged at £10/10GB, or the next tier of 60GB is £30 a month. By the most generous estimate, that's 33p/GB.

By comparison, the DC where I last hosted my colo'ed box gives 5TB of data a month with the basic package, and overage is charged at £20/5TB. That works out at 0.4p/GB.

I stipulate that there are domestic services that offer "unlimited" bandwidth, where the data-only price is effectively zero, but I submit those either have AUPs that degrade your access speed towrds zero when a certain throughput is passed, or cut you off after a certain point, or let over-committing sort it out (so either you can't get the throughput you want or you're effectively being subsidised by your neighbours).

So when comparing the above prices for data only, the colo works out nearly a hundred times cheaper than domestic bandwidth. I freely concede that you may not see similar pricing models where you live, but I would suggest that differences may be explicable by, inter alia, (a) regulatory interference (eg, if the government mandates domestic internet connections of a certain capacity for a certain price to a certain percentage of the populus, that price is now not representative of the cost), and (b) me living in a small country (so fibre runs are short) with some major peering points (eg London) within 100km.

Edit (in the light of your comment): you're not telling me what the overage charges on your office connection are, or how much throughput you get for your monthly fee. Assuming you can run at 6Mb/s for a whole month, that works out at 1000PLN for 1.5TB, which is 19.2p/GB.

But I just did a bit of googling on colos in Warsaw, and found someone called atman.pl who charge 18Eur/TB for throughput on their colocation package. That's about 1.5p/GB, which is comparable to what I see in London.

So I'm really sorry, but your question doesn't make any sense. Even where you are, colo data is much cheaper than domestic data. That's probably why people are downvoting your question, and voting-to-close it. You might want to ask, as you start to at the end, "why is my current internet connection provider ripping me off", but that's not a suitable question for SF.

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Well, it makes some sense. Background: I live in Poland, and my company pays over 1000PLN for a 6 Mb/s link (99%/month SLA, guaranteed bandwidth to the academic backbone network, but it's kinda too low anyway). That's comparable to DC prices. (And quality, I presume, though it's not really a redundant link). The new operator in the building offers us 100/25 Mb (D/U) for 10x less, but no word about SLA or CIR, or transfer limits. I'm in the process of getting the details out of them, and I'm curious where is the difference coming from. It's still quite possible the old ISP is ripping us off. –  odemarken Nov 14 '12 at 10:44
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+1 -- you need to compare apples to apples. Your bill at any colocation facility worth using is getting you WAY more than just bandwidth. Bandwidth is usually the cheapest component unless you're moving an insane amount of traffic (or creating overages). –  voretaq7 Nov 14 '12 at 17:03
    
@MadHatter, thanks for your time. I'll edit the question to reflect what I learned about this issue. –  odemarken Nov 15 '12 at 11:19
    
+1 Michigan, USA: Comcast $65/250GB (ABR 16/4Mb), Waveform $50/2TB (ABR 100/100Mb). Colo bandwidth and transfer is much cheaper. –  Chris S Nov 15 '12 at 14:15
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The guaranteed bandwidth is one part of it. A 99% or 99.999% uptime SLA another.

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This. It's about SLAs and all the technical difficulties that go with it. I recently had a chat with people that run the backend for our national 911 Call Center. If they violate their SLA they could get prosecuted in Italy. Their service is not cheap. –  ItsGC Nov 14 '12 at 9:22
    
Not this, unless the SLAs are meaningful. Most colo bandwidth SLAs are too toothless to justify a real risk premium; I discuss this more below. In your example, the SLAs sound very meaningful indeed, and for those, I accept there will and should be a large risk premium. –  MadHatter Nov 14 '12 at 10:45
    
If you care to repost your answer at my new take on this question, you can count on my upvote. –  odemarken Nov 16 '12 at 9:16
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The difference is in the availability of the network, consistency of speed and the level of redundancy (e.g. multiple providers/transports, BGP, etc.).

It's not a situation where datacenters are bringing in a consumer-class cable modem or DSL line :)

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If you care to repost your answer at my new take on this question, you can count on my upvote. –  odemarken Nov 16 '12 at 9:16
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