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Ask HN: Why is hosting in Australia (and New Zealand) so crazy expensive?

11 points by mingabunga ↗ HN
I have a dedicated Xeon server in Australia with 20TB monthly bandwidth allowance, costs about US$315 a month - this is cheap. I think I got lucky because I went to get another, my 20TB bandwidth now costs US$1550 a month. Looking around for a VPS, found 200GB allowance a month for $60, but each extra GB over is $1. So it seems the bandwidth is expensive compared to Europe where they're just giving it away. What gives?

22 comments

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levinet
Few simple answers off the top of my head:

Electricity is generally more expensive in Australia than US/Europe

Internet (consumer and business) is more expensive, huge area to cover with low population density

Most DCs are located in Sydney and Melbourne where rent/land and other costs are a lot higher than less populated parts of the country

mingabunga
Ok, I can understand the price of renting the box, but bandwidth seems unreasonably expensive.
lsiebert
I expect that they are passing on the cast of laying oceanic cable as well.
levinet
Local bandwidth in Australia is generally more expensive than Europe or USA because we have a huge area to cover and a relatively low population. Also because of this the infrastructure that does exist is held by a handful of companies who can pretty much dictate the price.

International bandwidth is hugely expensive in Australia, everything goes by expensive undersea cables. While both the US and Europe have bordering countries where most of traffic is likely to go. Also similarly with local infrastructure, it's all owned by just a handful of companies who can strong arm providers.

Also in reference to your original question, it sounds like the VPS provider your using doesn't separate local vs. international traffic, so they're probably assuming most of it will be international and are charging on the higher end of the scale.

I think BinaryLane charges a bit less at around $1 per 10GB. There's probably cheaper providers out there but YMMV.

joshschreuder
> International bandwidth is hugely expensive in Australia, everything goes by expensive undersea cables

I have heard this quite a bit, but why is it hugely expensive for this reason? Is it because of the maintenance of the undersea cables or recouping initial construction costs?

NeutronBoy
It just all adds up:

- First world, bandwidth hungry nation.

- Low population to recoup costs from.

- Very low population density so transit across the country isn't super economical (related to above)

- Expensive to build transit because it's all underwater cable, no easy cross-border land-based fiber.

tomcorrigan
Essentially Telstra (the biggest ISP in Australia) charges a fortune for transit. Cloudflare provide some detail about the relatively high cost here: https://blog.cloudflare.com/the-relative-cost-of-bandwidth-a...
mingabunga
Thanks. This is why HN is great, quick informative answers from lots of smart people :)
fratlas
Do you think Australian ISP services is a market that could be disrupted? As an Aus, I would love Google to come through and strongarming Telstra into at least rethinking their inflated prices.
levinet
Definitely could, but they'd need to lay their own international cables -- PIPE Networks (owned by TPG) is the closest we've got to a market disruptor and they can only compete because they have their own undersea cables.

Given the low total population and very low population density it's probably not really worth it though.

Gustomaximus
As a general comment, I hear this 'low population density' about Australia a bunch. I wonder if its a fallacious argument for many business cases.

Contrary to the Crocodile Dundee image, Australia is one of the most urbanised nations in the world. We have almost 50% of the population in Sydney & Melbourne alone, and our top 10 cities takes this to almost 90%. While a big landmass you can reach a high proportion in relatively few spots. Assuming a business doesn't expect infrastructure/coverage for the entire population Australia not to bad density.

Obviously the general remoteness of Australia and 25m population remain big factors, and I suspect this is more relevant than the often cited density issue.

bobby_9x
Everything is more expensive in Australia. A large social net, a minimum wage > $20USD, and other high taxes, leads to rising costs of most goods and services.

I went there 2 years ago on vacation and stayed in hostels (which were $70USD/night) to save on price. Meals at most restaurants for 2 was $50+ and a 20 oz of coke and a small bag of chips cost me close to $11USD.

Internet was more expensive than anywhere I traveled. Free wifi was almost non-existent and most hostels charge $25USD/8 hours (it was also ~4MB).

It's probably why they don't have a flourishing startup scene.

fratlas
Our minimum wage is NOT $28 AUD, it's ~17. Meal at a tasty restaurant for 2 is ~35-40 if you don't go super fancy. Coke + chips maybe 5-6, 4 in a supermarket. Free wifi is almost EVERYWHERE (cafes/mcdonalds/businesses). But yeah, tech scene is awful. Just awful.

I'm sorry you had such an expensive experience, Sydney is considerably the more expensive of the capitals.

joshschreuder
Free wifi is becoming more prevalent over here (at least in Melbourne), but it's nothing compared to a lot of the major cities in the US for example.
fratlas
Probably due to the fact that no two Starbucks are more than 3 blocks apart in the US :P
technion
I have several colleagues in the retail industry talking about free Wi-Fi being "the next big thing" and several major chains are only just jumping on board. I'm incredibly confused by it - we've reached a point where everyone has a mobile device with 4G at better speeds than the 1MB DSL service shared across 20 patrons.

I would have sworn from a technology point of view, that buying a bunch of APs to offer free Internet in your café would be a dying trend.

SyneRyder
The retail stores aren't really interested in the free WiFi - they're more interested in the silent tracking of customers that comes with the access points, even if the customers never actually connect. Think Google Analytics for brick & mortar retail, and being able to track location & frequency of individual customers in stores.
ojm
Are you trying to be the 'typical' American who portrays 'facts' about other countries that are nothing of the sort?

Minimum wage is AUD 17.29 per hour, not the AUD ~28 you quote. A hostel at Bondi Beach is ~ USD 50 per night, not the USD 70 you quoted (and this is an expensive spot!). I can only think you must have visited when the USD was down the toilet.

On the hostel charging USD 25 for 8 hours. You can get a 4G sim card with with 50mbps+ download and 5GB limit for AUD 30ish.

But yes, everything is more expensive, generally. The dollar fluctuations makes it interesting. Also, sales tax is included in our prices unlike the US.

bobby_9x
"Are you trying to be the 'typical' American who portrays 'facts' about other countries that are nothing of the sort?"

The facts are that Australia has high taxes and is much more expensive than the US. The numbers I gave might not be 100% accurate, but it's still a fact.

"Also, sales tax is included in our prices unlike the US."

I would rather have sales tax separated. Why? I've seen so many people bitching about why certain products are more expensive in Australia, and commonly blame the company.

In reality, they should be blaming the government. Merging the prices allows politicians to raise taxes without the citizens actually knowing the true amount.

The same thing happens with the gas tax in the US. So many people bitch about the cost, yet have no idea that taxes account for a big portion of it.

allendoerfer 

   I would rather have sales tax separated. Why? I've seen so many people bitching about why certain products are more expensive in Australia, and commonly blame the company.

   In reality, they should be blaming the government. Merging the prices allows politicians to raise taxes without the citizens actually knowing the true amount.
This is not true. If you sell to consumers in Germany, you have to add the sales tax in your prices, too, but you also have to give out an receipt that shows the tax rate and amount. I believe it is the same in Australia. The consumer knows the tax rate and he does not have to calculate the price he is paying.

If you sell to businesses only, you do not have to add the tax in your prices, but you have to give out this receipt, too.

CyberFonic
Our office is in Sydney. It's not as expensive as you make out. You do not need to rent in a CBD high-rise. Whilst some VPS are expensive you can shop around. We use AWS & Google hosting - only about 10% more than USA. You have to shop around for good prices for internet access. Most mobile phone plans provide ample access at reasonable cost. Home ADSL is around $70 / mth for unlimited access.

Most phone boxes provide free WiFi as do MacDonalds, StarBucks, etc. But with 4G & LTE on your phone, you generally don't bother.

thenomad
A workaround: I tend to rent servers in Singapore when I need to address the AU/NZ market. They're considerably less expensive and the latency's still pretty good.