Study finds breakeven point for businesses when a private network solution ‘pays for itself’

A new case study on egress charges has suggested companies that exchange roughly 25Mbps (megabit-per-second) or more cloud traffic per month could significantly reduce their fees by switching to a private network solution which ‘pays for itself’.

  • 8 months ago Posted in

In a research paper entitled ‘A Business Case for Internet-Bypass Solutions in 2023’ authored by William B. Norton, an internationally recognised expert on internet peering, the study identified an ‘internet-bypass breakeven point’ that determined the cost benefits for companies who adopt a private network solution.

Private network solutions, such as AWS Direct Connect, Google Cloud Interconnect and Microsoft Azure ExpressRoute, are a more secure alternative to the public internet for connecting to the cloud. These solutions, offered by cloud providers and third party providers, can significantly reduce egress charges by up to 40%.

Norton’s research applied a ‘Rosetta Stone’ of terms and pricing translations across the top three cloud providers – AWS, Microsoft Azure, and Google Cloud – and found the breakeven point for deploying a private network solution would benefit companies which had cloud internet egress fees exceeding £577 per month.

Norton commented: “The litmus test for my research is a simple question, 'Is it cheaper to exchange cloud traffic over the public Internet or is it cheaper to send it over a dedicated private network?'. The business case for switching to a private network solution demonstrates that the breakeven point occurs very early, around 25Mbps, and that the cost savings continues from this point forward towards a 40% cost savings on cloud internet egress fees. Securing your network can save money too."

Egress fees refer to the metered fees that all major cloud providers charge for data that exits their cloud. These charges, often called ‘hidden fees’, have come under growing scrutiny from businesses stung by hefty and unexpected egress charges when they go to transfer data out of the cloud, as have the major cloud providers’ complex terms of service.

Earlier this year, the UK’s communications regulator Ofcom raised concerns about these ‘hidden fees’ and found that many customers are “facing significant price increases” at contract renewal time. The Ofcom report also raised concerns about “the charging of egress fees, restrictions on interoperability, and the structure of committed spend discounts.”

Norton’s findings address these rising cost concerns by encouraging companies to explore the availability of ‘internet-bypass solutions’ wherein the transfer of large amounts of data from the cloud would pay for itself.

In recent years, the emergence of Software Defined Cloud Interconnects (SDCI) platforms has made it easier for businesses to privately connect their on-premises network directly to the cloud. By leveraging advancements in network automation, SDCIs simplifies cloud networking for businesses, enabling them to connect to multiple cloud providers in multiple locations and with full end-to-end management and control via a self-service portal.

Commenting on the research, Neil Templeton, Senior Vice President of leading SDCI provider Console Connect, said: “These findings support our own research of the added value provided by private networks. Switching to a SDCI model gives companies a more efficient use of network resources by dynamically allocating bandwidth and adjusting network capacity as needed, resulting in further cloud cost savings. SDCIs also offer greater flexibility by allowing businesses to establish safe and secure network connections between multiple cloud providers, data centres, and other network locations.”

Console Connect will hold a free live webinar on 14 November 2023 at 10am EST/3pm GMT called ‘Assessing the Real Cost of Egress’ in which Norton, together with Darren Mott, a former FBI Supervisory Special Agent and host of The CyBUr Guy Podcast, and Jay Turner, Vice President of Development and Operations of Console Connect, will discuss the research findings and the wider topic of the security benefits of private networks.

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