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The Internet is not free. Understanding connectivity cost structures to public clouds.

Written by Gabriel Grifasi, Partner Development, Director, Transtelco

March 31, 2021

By comparing private cloud connectivity (Cloud Connect) in dedicated cloud connections cost structures to the Internet VPN connection, we can obtain a clear economic advantage in dedicated private connections beyond technical conveniences.

Calculating connectivity costs to the clouds may seem difficult and this item has not often given the attention it deserves. In this way, Transtelco customers can get an additional advantage apart from the highest standards of availability and data transfer times that our company offers.

Cost of Connectivity to the Public Cloud

Transtelco’s costs for its Cloud Connect service  – private and dedicated connectivity to public clouds – are simple: a fixed monthly fee based on contracted bandwidth, and also flexible as this bandwidth can be increased according to customer needs.

 In the case the customer connects through a VPN internet connection, they will also have to pay a monthly fee for the contracted bandwidth.

 In addition to this cost there are other costs associated with connectivity charged by AWS, Azure, or Google Cloud. These costs may vary from cloud to cloud, but have a similar structure.

Port Cost

It is an hourly port utilization fee. In the case of a dedicated connection, that fee changes depending on the bandwidth of the port and in the case of Internet VPN connection there is one fee regardless of the bandwidth of the port. These values are not significant compared to egress traffic costs..

Egress Traffic Cost

Every cloud provider allows you to upload as much data into their infrastructure as you want at no charge, but they charge you a cost per Gb when you download it from their datacenters. While there may be some differences in price scales from one cloud to another, there’s a big difference between the Egress Traffic Cost for a dedicated Cloud Connect connection than the same cost for a VPN Internet connection, reaching four times the cost per Gb downloaded compared to a dedicated connection. This item becomes more relevant  in the Total Cost of Connectivity (TCC) to the cloud as we increase its use.

Total Cost of Connectivity (TCC)

As mentioned above, when we evaluate the Total Cost of Connectivity we will have two different equations: whether we use a dedicated connection, Transtelco Cloud Connect, or a connection through Internet VPN.

TCC Cloud Connect = Private Link Cost (Cloud Connect) + Port Cost + Egress Traffic Cost
TCC Internet VPN = Internet Link Cost + Port Cost + Egress Traffic Cost

 

While the cost of a dedicated cloud link may result more expensive as egress traffic increases, the Total Cost of Cloud Connect Connectivity becomes cheaper. As we can see in the graphs below, there is a bandwidth above which dedicated connections become economically more convenient than an Internet VPN cloud connection.

Starting with bandwidths in the range between 100 Mbps and 200 Mbps, it becomes more convenient to use Transtelco’s Cloud Connect. This matches with cloud providers bandwidths recommendations for using dedicated private links (above 200 Mbps), although this recommendation does not come for cost reasons, but for privacy, quality of service, and security reasons.

These calculations were established based on market prices for a very conservative degree of link utilization, only 25% or 180 hs per month,  this is equivalent to weekdays use during business hours.  Assuming closer to business reality utilization rates, the convenience of a Cloud Connect results for even lower bandwidths.

As an option, Azure offers an unlimited plan that provides a flat price for unlimited data downloading. This provides significant savings for those who egress large amounts of data on a regular basis.

If you protect your data and applications from external threats within your enterprise, why will you use the public internet to transport that same information to and from the cloud?

With any of these cloud providers, you will benefit from significantly reduced egress charges when using Direct Connect, ExpressRoute, and Partner Interconnect private connections through Transtelco’s Cloud Connect, versus connections over an Internet VPN.  This is an additional advantage to all the benefits that having a private and dedicated service deliver.

Based on all these benefits and in order to secure a better user experience, cloud services providers have offered this price reduction as an incentive for customers to use private connections. Transtelco not only enables this type of experience, but gives you the flexibility, agility, and scalability that a public cloud connection needs.

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