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Arrcus automates cloud egress cost management

Cloud data transfer costs are a headache for both enterprises and government entities. Arrcus has launched an Egress Cost Control (ECC) capability to automate the visibility and management of data transfer fees.

Kelsey Ziser

January 30, 2024

4 Min Read
Shekar Ayyar, CEO, Arrcus.
Shekar Ayyar, CEO, Arrcus. Source: Arrcus

Cloud egress costs are a little like buying a concert ticket. The ticket itself might be within budget, but once "convenience fees" and the like tally up the final cost is painful.

In an effort to automate the process of predicting and managing egress costs, virtualized routing and switching startup Arrcus has launched an Egress Cost Control (ECC) capability as a part of its multicloud networking service FlexMCN. More on Arrcus' approach later.

Egress costs are everywhere

Getting data into the cloud – or ingress – is often free, but fees for moving data within and between clouds can add up. Egress or exit fees aren't limited to charges for downloading data from a cloud. Data transfer charges can occur when moving data between clouds, across regions, between applications and more.

Hyperscalers are beginning to address concerns around data transfer costs. Earlier this month, Google Cloud stopped charging exit fees when customers switch to a different cloud provider.

"Historically, enterprises have felt that egress costs were a way to keep an enterprise customer locked into a cloud, because ingress is free," said Roy Chua, founder and principal of AvidThink. "…If you take AWS, for instance, if you move data between regions there are egress fees called data transfer fees." (Here's a closer look at AWS data transfer costs in a diagram by economist Corey Quinn with The Duckbill Group.)

Related:Arrcus bags $65M in funding for virtualized routing and switching infrastructure

A more distributed workforce accessing cloud applications plus the use of large language models (LLM) for generative AI (genAI), database replication and high performance computing (HPC) are among the factors contributing to egress costs.

Egress costs can account for 10% to 20% of total cloud bills for enterprises, said Chua. In part, the costs are there to incentivize organizations to keep their data within one cloud provider, he added.

Egress costs are unavoidable – enterprises are even charged for private connections or direct connection to a single cloud provider – and will likely never go away, Chua said. After all, cloud providers are charging for the service of data transfer.

Regulating data transfer costs

Enterprises aren't the only ones concerned about data transfer costs. Last September, the US Government Accountability Office (GAO) published a report stating that the Department of Defense (DoD) needs to improve its process of tracking and reporting data transfer fees.

In 2022, the DoD committed nearly $3 billion toward cloud computing contracts, reported the GAO. "But DoD doesn't have a way to track and report on these fees department-wide," the GAO said.

Related:Cloud roundup: Google cuts cloud switching fees

The EU is also taking notice of data transfer fees. The new EU Data Act will require cloud providers to address the challenges of switching between cloud services, which includes egress fees.

"Data portability is also addressed by the Data Act," reported Light Reading's Tereza Krásová. "The EU seeks to simplify transfers of data from one cloud provider to another, tackling an issue that has long exasperated telcos (and many others)."

The UK has been investigating anti-competitive practices within the cloud market in recent years. The UK's Competition and Markets Authority (CMA) began investigating the sector after EU telecommunications regulator Ofcom "identified several features that make it difficult for customers to switch and use multiple cloud suppliers including egress fees, cloud repatriation fees, and discounts to incentivize customers to use only one provider," reported Data Center Dynamics.

Arrcus' Egress Cost Control service

Fortunately, many multicloud providers provide visibility into egress charges through customer dashboards and allow organizations to switch links to optimize charges, Chua said. The difference in Arrcus' approach is that they're taking it a step further to provide egress cost visibility management in an automated way.

Arrcus said that in addition to providing visibility into egress costs, its Egress Cost Control (ECC) technology "intelligently routes traffic to destinations with the lowest egress costs."

In conversations with customers, "cloud costs as a whole are a big concern in general because they're becoming an increasing part of their expenditure," said Arrcus CEO Shekar Ayyar.

Arrcus began the process of developing ECC by accessing the costs published by hyperscalers for customers to "exit their domains" and different points in the network, said Ayyar.

With ECC, Arrcus has "taken that [hyperscaler cost] information and converted that into a routing policy which can be imposed at a global level, or we can do it in terms of a family of addresses or at a flow level such as SRv6 (segment routing and IPv6)," he explained. Customers can then better assess their budget for egress costs.

There is a caveat to automating this process. While Arrcus' approach could reduce egress costs, it could also result in latency, said Chua. However, it's recommended to use ECC for backup workloads where latency is less of an issue. Bulk database replications are also the area of cloud data transfer where the most data is consumed, he explained.

"For workloads that aren't latency sensitive, you could turn on this capability," said Chua. "You can do it flow-by-flow, and if you're ok with added latency, it may find you a cheaper alternative."

This tradeoff is similar to using a booking service such as Expedia where travelers might have to weather a longer layover in exchange for a discounted airline ticket, he explained.

About the Author(s)

Kelsey Ziser

Senior Editor, Light Reading

Kelsey is a senior editor at Light Reading, co-host of the Light Reading podcast, and host of the "What's the story?" podcast.

Her interest in the telecom world started with a PR position at Connect2 Communications, which led to a communications role at the FREEDM Systems Center, a smart grid research lab at N.C. State University. There, she orchestrated their webinar program across college campuses and covered research projects such as the center's smart solid-state transformer.

Kelsey enjoys reading four (or 12) books at once, watching movies about space travel, crafting and (hoarding) houseplants.

Kelsey is based in Raleigh, N.C.

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