Yep, and once you're at the multi-gigabit per second level, the price drops much lower than that pretty quickly.

Indeed - Internet Transit at scale (10 Gigabit+ ports) goes for around $0.63/Mbps at 95th percentile. [1] - for the above quoted 700 Terabytes/month, that works out to $1341/month, if it's evenly spread out on the lower 95th percent of the circuit at around 2.129 Gigabits/second.

[1] http://drpeering.net/white-papers/Internet-Transit-Pricing-H...

They (Level3, Cogent, Telia) don't have millions of ports though...

This is true, but I can't imagine Google/Amazon/Microsoft are using Cisco/Juniper routers at every level of their network.

Hosts play a big part of SDN in that they support the dvswitches along with guest VMs. Not everything is a Cisco/Juniper. Switching hardware is still common in TOR and egress.

VLAN's and Virtual Appliances in the same environment as the guest machines to facilitate routing should allow for scale without costing these virtualization providers too much.

$1/Mbps per what (unit time)?

Per month, usually (billed 95%ile). That price will decrease by quite a bit with more volume.

Thanks. How long has it been roughly $1/Mbps/Month ? Do you know of any sources with historical data?

Average was $0.63/mbit in 2015, and I personally haven't seen lower than $0.40/mbit.

http://drpeering.net/white-papers/Internet-Transit-Pricing-H...

That really depends on volume, location, and provider. For large volumes and cheaper providers (Cogent, HE.net, etc) it's been that way for 2-4 years or more. HE.net will now sell a full 10GbE port for $2600/mo, Cogent isnt too far behind. Sub $0.40/Mbit at >25Gbps volumes in major locations is doable.