If you’re bootstrapping a CDN company, for example, you can’t just start with a single server. You need the global footprint as a selling point. But since you can’t provision that bandwidth elastically, you’re going to have a monthly bill of roughly $1k per POP as soon as you start the company, significantly reducing your runway.
The reason there are so few solutions is because the status quo is charging $/Gb, it’s a huge source of income for cloud providers, and it makes traffic engineering significantly easier because users have incentive to minimize bandwidth costs.
The product I'm interested in building is basically a bandwidth marketplace. It's a hard problem and I've been thinking about it for a while. In college I researched "TorCoin" for my senior thesis which explored the possibilities of a proof-of-bandwidth cryptocurrency. I know some ICO's are working on this now but I'm really skeptical the idea can work without a killer product in the hands of users driving adoption. That's the product I want to work on. I'm still figuring out exactly what it is, but I've been thinking about this kind of thing heavily for the past 5 years and feel pretty confident I can execute if given the right time, team and funding.
For an illustrative example, imagine you have a 1 Gbps (gigabit-per-second) transit line that you are saturating at 95% (~972 Mbps) 24/7. Over a month, you will push 312,075 gigabytes (312 TB) over that line. Amazon transfer pricing is a bit complex to calculate exactly, but for 312 TB you would pay roughly 0.07 per GB for a total of nearly $22,000.
You can rent a 1 Gbps line for under $500 per month.
Think of it like buying a pipe. You can either rent the pipe, or access to the pipe. If you rent the pipe, you're buying IP transit. If you rent access to the pipe, you're buying data transfer. When you rent the pipe, you pay based on its diameter -- the capacity of what you can fit through it. But when you rent access to it, you're charged by how much you put through it.
IMO, this price gouging is the single biggest problem with cloud providers and also leaves a hole in the market. The cloud is pitched as elastic, but it's only elastic so long as your business is not bandwidth constrained. For example, you would not be able to build a competitive CDN or VPN network in the cloud, because you cannot charge your customers for data transfer since your competitors do not charge like that. But you have to pay for their data transfer, even if it all fits within capacity that you could provision for a 40th of the cost.
I've been interested in this market for a long time. A few years ago I was pitching a startup that invovled this idea. It never came to fruition, but I do have an (unfinished) slide deck that might interest someone: https://docs.google.com/presentation/d/1BJICGRhDL95vdBFg0ZE8...
If anyone is working on this problem or wants to discuss it, send me an email as I've got a lot of thoughts on the matter and will be working on a project in this space within the next year.