CloudFlare vs Telstra

Matthew Prince is to the CDN industry what Reed Hastings is to Netflix, and in this case, Telstra would be Comcast. Today, Matthew came out of nowhere and slammed Telstra for their high transit cost. Telstra wasn’t too happy about the accusation, publicly saying his figures were factually incorrect and off by 10x. This type of outrageous bravado has catapulted Matthew to stardom in the CDN industry. Sure, sometimes his statements might be factually incorrect or inappropriate, but he gets the job done, because it brings a ton of publicity to CloudFlare.

Besides that, Matthew makes the CDN industry more fun, because he make claims that other CDNs won’t, and keeps us all entertained.  Honestly, I think Matthew is playing the psychological card on Telstra, in order to force them to drop their transit prices in Australia. In their blog, CloudFlare has published a chart on transit pricing for the various regions of the world (illustrated below). Now let’s break it down and analyze the data. 

CloudFlare Transit Pricing Matrix

Region

Percentage Peered

Effective Price / Mbps /Month

Relative to Lowest Price

Europe

50%

$5/Mbps

1x

North America

20%

$8/Mbps

1.6x

Asia

55%

$32/Mbps

6.4x

Latin America

60%

$32/mbps

6.4x

Australia

50%

$100/Mbps

20x

Analysis on CloudFlare’s Transit Cost

When it comes to customer pricing, CDNs charge customers on a per GB data transfer model, like $.05/GB for 200TB of monthly data transfer (no features included). In addition, some CDNs sell their services on the 95% pricing model, selling IP Transit to customers, like 10Gbps/monthly commit for $4/Mbps. On the other end, when it comes to buying transit from carriers, CDNs buy transit from multiple carriers at different price points. Thereafter, they use a blended cost to help them price out their CDN services. For example, AT&T might be $8/Mbps, Verizon $6/Mbps and Level 3 $4/Mbps, so the blended cost is $6/Mbps. The CDN will use the $6/Mbps blended cost to price out their CDN services, in the form of per GB pricing.

However, in CloudFlare’s case, it’s doesn’t really matter, because they give away bandwidth to 1.9M customers. In essence, they take the standard CDN business model of making money, and throw it out the window. Regarding the pricing in the chart above, CloudFlare stated in their blog that “We don’t disclose exactly what we pay for transit, but I can give you a relative sense of regional differences”.  So in other words, the transit pricing that CloudFlare published is fictional, just like Mickey Mouse 🙂 . Conclusion: It’s difficult to analyze data when the company publishing the data is toying with us. But for Matthew, mission accomplished, because the entire press is writing about it, including me.