Calling itself Bandwidth AllianceOpens a new window (BA), the new union offers no-cost transfers between affiliated hosting companies and ISPs that route data for enterprise customers. Retaliating against the mark-ups applied by cloud operators that effectively lock companies into respective providers, the group’s remaking of the pricing structure possesses the potential to remake the market for cloud services.
Market-leading Amazon Web Service’s (AWS) cloud computing subsidiary is not among the ten founding partners, speaking volumes about BA’s disruptive aim.
Major Partners Create Major Disruption
Led by Cloudflare, which operates a network of servers housed in 150 data centers around the world, BA includes Microsoft Azure and IBM Cloud among its ten founder members.
Other founding members include Digital Ocean, a cloud applications platform; storage provider Backblaze, WordPress publisher Automatic; domain registry and hosting service DreamHost, outsource companies Linode (compute), Packet (automation) and Scaleway (storage), and Vapor, which operates software-defined networks for edge applications.
Taken together, BA comprises a range of intermediaries that stand between cloud operators and the consumers of those services: intermediaries that operate on the settlement-free peeringOpens a new window for data transfer that guides the industry.
Culpability for Climbing Consumer Costs
According to BA, cloud customers are charged the same fees for sending data, whether across the data center or around the planet, by the same fiber optic infrastructure that those charges are meant to support.
As a result, margins that can range into the thousands are built into costs that are passed onto the customer, no matter the cost of infrastructure commitments and upkeep.
Extending the Private Network Interfaces (PNIs) they use with cloud operators to their mutual customers will go part of the way in cutting costs. BA members also hope this will free up data transfer in ways that will enable users more easily to access specialist services such as warehousing and analytics both from cloud providers and member intermediaries, even as it deprives the cloud operators among its membership a source of revenue.
Profit-loss Worth Market Share Increase
The sacrifices made by companies eager to cut into AWS global lead are clearly deemed worth the loss. The company produced more than $17 billion last year. Its 34% share of the global market is larger than Microsoft Azure (13%), IBM Cloud (8%) and Google Cloud (6%) combined, according to Nevada-based industry tracker Synergy Research Group.
For its part, AWS is fostering fee-free transfer between cloud vendors. Last week, the company announced that data integration and computing servicesOpens a new window are being made available to common customers of the Salesforce cloud platform.
AWS also offers on-demand computing for users of enterprise resource planning software from German giant SAP. Last week, Microsoft announced an open-data initiativeOpens a new window in a partnership that includes content-creation specialist Adobe.
As BA’s CDN, Cloudfire’s routing engine is the pivotal tech for data transmission among partners. Called Agro, it’s more efficient than Border Gateway Protocols used in network routing and ensures data is delivered to the Cloudflare servers nearest the customer, simplifying transfer via PNIs.
Cost parameters are being added to the engine’s consideration of flow-allocation across the Cloudflare network, and member companies are using that data to calibrate pricing for their mutual customers.
Over time and as users multiply (potentially, even, to include AWS), members say they anticipate splitting BA into a separate entity. Until then, they expect mutual customers to benefit from lower costs for data transfer.