Why Egress Fees Are a Lock-In Problem
Open standards have made it easier than ever to launch an online business. They foster innovation, improve security, and reduce costs. Not everyone welcomes that competition, though. In the cloud industry, a less obvious mechanism than proprietary protocols has emerged for gaining leverage over customers: high egress fees.
These charges typically don't appear during initial cloud adoption. Ingress is often free, but the moment you need to move data out — to go multi-cloud or adopt a best-of-breed service — the costs begin. The lock-in effect compounds as your application stack grows: more data traveling between more services means higher egress taxes, making it increasingly difficult to switch providers or negotiate pricing.
The Bandwidth Alliance Approach
Cloudflare launched the Bandwidth Alliance in late 2018 with more than fifteen cloud providers who share a belief in an open Internet. Members agree to eliminate or steeply discount egress fees for data transfer, offering an alternative to vendor lock-in.
The technical mechanism relies on Cloudflare's network architecture. With over 206 data centers globally, traffic is received at the facility nearest the user and routed to the data center closest to the origin. Rather than traversing a transit provider, that traffic is handed off to partner data centers via private network interconnects (PNIs) or peered connections. These links — often a fiber optic cable between routers in the same facility — carry no incremental cost for either party. Cloudflare's position as one of the world's most interconnected networks, peering with over 9,500 networks globally, makes this model viable across many regions.
Measured Customer Savings
The financial impact for customers is significant. Cloudflare analyzed a sample of Bandwidth Alliance participants, estimating egress savings based on data volumes flowing from origin to Cloudflare. Using the retail price of $0.08/GB versus the discounted $0.04/GB for large transfers, savings ranged from 7.5% to 27% of customer spend on Cloudflare. For every $1 spent, customers saved up to $0.27.
Some partners offer $0/GB egress, which can increase savings further. Real-world examples include one media delivery customer saving up to 85% on storage costs and another reducing their overall cloud bill by 50% through choosing best-of-breed storage paired with Cloudflare's network.
"We were looking at moving our data from one storage provider to another, and it was a total no-brainer to use a service that was part of the Bandwidth Alliance. It really makes sense for anyone looking at any cloud service, especially one that’s pushing a lot of traffic." — James Ross, Co-founder/CTO, Nodecraft
Earlier this month, joint customers of Microsoft Azure and Cloudflare gained access to Azure's Data Transfer Routing Preference. Enabling it through the Azure dashboard automatically discounts egress bills for Cloudflare traffic.
"Before taking advantage of the Routing Preference by Azure via Cloudflare, Egress fees were one of the key reasons that restricted us from having more multi-cloud solutions since it can be high and unpredictable at times as the traffic scales. Enabling Routing Preference on the Azure dashboard was quick and easy. It was a one-and-done effort, and we get discounted Egress rates on every Azure bill." — Darin MacRae, Chief Architect / Cloud Computing, MyRadar.com
The Bandwidth Alliance positions itself as an alternative to single-platform lock-in for organizations evaluating cloud storage, networking, and security options.
