Cloudflare enlists Microsoft and other cloud companies in the Bandwidth Alliance, promising cheaper cloud networking costs

Matthew Prince, co-founder and CEO, Cloudflare, speaks at the 2018 GeekWire Cloud Tech Summit. (GeekWire Photo / Kevin Lisota)

With one notable exception, Cloudflare has brought several major cloud and data center companies together in a new industry group called the Bandwidth Alliance, which intends to waive or greatly discount the fees cloud customers pay for outbound networking services.

Microsoft, IBM, Digital Ocean, Automattic, and Backblaze are among the inaugural members of the Bandwidth Alliance, scheduled to be announced later on Wednesday as part of Cloudflare’s eighth birthday celebration, which has now somehow stretched over two weeks. The group has vowed to make technology and accounting changes to their business practices that will allow Cloudflare customers using their services to pay either sharply reduced fees or absolutely nothing for traffic that passes through locations where their networks are connected to Cloudflare’s content delivery and anti-DDoS services through a private network connection.

As of midday Tuesday, Cloudflare CEO Matthew Prince said he was trying to convince Amazon Web Services to become part of the group, even despite the fact that Cloudflare public-relations representatives initially pitched the Bandwidth Alliance as a united front against the market power of AWS. Prince seemed doubtful that AWS would announce its participation prior to the announcement going live, indicating that the company sprang the idea on AWS relatively recently, but predicted that AWS would either join the group or follow its lead with a discounted networking service in the near future.

“These bandwidth charges, which cloud providers only charge on traffic leaving their networks, creates a bit of the ‘Hotel California‘ of services, and makes it so once you choose a cloud provider, it’s hard to move off of them,” Prince said. Somewhere, Don Henley is smiling.

But at the global level, making the internet global is an expensive undertaking. All the major cloud vendors have all built their own private networks to haul traffic around the world, and these massive, speedy networks are very expensive to build, maintain, and upgrade.

Therefore most cloud companies charge something for the amount of customer traffic that they carry over long-haul distances on their own networks or pay to transport over backbone providers like Level3.

Cloudflare’s network reach, as of late September 2018. (GeekWire screenshot)

Prince doesn’t begrudge cloud companies for charging something for this service given the expenses involved, but singled out networking fees as one of the higher-margin services that cloud companies provide. And in his mind, that’s especially true for traffic that passes from cloud companies to end users through Cloudflare’s services in data center regions where those cloud providers have directly connected, or peered, their networks with Cloudflare’s.

Take, an excellent website you should all be spending more time visiting, and which uses the services of both Cloudflare and Microsoft Azure. If you clicked on this story from, say, Australia, you’d pass through Cloudflare’s network on your way to Microsoft Azure’s West US data center in California, and then this story would head back to Australia passing through both those networks.

Like most cloud companies, Microsoft charges pennies per terabyte per month that we send out to our readers from its services. If you’re running a massive web operation, that adds up pretty quickly, and the idea behind the Bandwidth Alliance is that traffic intended for customers of Cloudflare’s network that passes through a data center with one of these private interconnections doesn’t actually need to travel over the cloud provider’s expensive network.

Prince thinks Cloudflare can carry that weight. It has peering connections with major cloud providers in nearly all the regions in which they operate data centers, and as part of the Bandwidth Alliance it is promising to create peering connections in the places in which it hasn’t yet established private networking interfaces with participating members.

Cloudflare has been working with Google on this idea for several years, Prince said, striking a deal with the company a while ago through its CDN Interconnect program. Customers of both Google and Cloudflare will pay 75 percent less for outbound data transfer fees compared to the list price, a price cut Microsoft has agreed to match, Prince said. Cloudflare later clarified that Google is not expressly part of the Bandwidth Alliance, but it has agreed to match the pricing.

And the other companies involved in the Bandwidth Alliance, including data center giants like Digital Ocean, fringe cloud companies like IBM, and WordPress host Automattic, will waive outbound data transfer fees for mutual customers.

Prince thinks this movement could help make multicloud computing even easier, assuming that lower data egress charges will make it easier for cloud customers to pick the best services across AWS, Azure, and Google Cloud as part of their infrastructure strategy.

“We see our role as being the fabric that connects various clouds together, and makes it easy to move from one to the other to whoever is providing the best services and the best technology and the best price at any given time,” Prince said.

“The reality is that Google is good at some things, and IBM is good at some things, and Microsoft is good at some things, and Amazon is good at some things,” he said. “In an ideal world, it wouldn’t have to be all or nothing; you could pick whatever cloud provider is best for the particular job at hand, and not worry about the cost of moving data between them.”

Cloudflare’s announcement comes amid several days of data-sharing announcements across big cloud services providers, including a three-way deal between Microsoft, SAP, and Adobe as well as an expanded agreement between Salesforce and AWS. We’re in the early days of an era of enterprise computing in which customers are demanding more choices than this market has historically provided, and cloud vendors seem to be responding.

[Editor’s note: Due to incorrect information provided by Cloudflare, this headline and post have been updated to clarify that Google is not a formal member of the Bandwidth Alliance.]

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