Cloudflare Inc. is joining forces with Google LLC, Microsoft Corp. and other technology companies to reduce the cost of network resources in the public cloud.

The firms will pursue the effort under the banner of a group named the Bandwidth Alliance that formally launched today. Participating cloud providers will cut or waive the fees they charge on egress traffic that Cloudflare customers send from their platforms to other parts of the web, while the latter company will take over much of the network load.

Currently, most cloud providers handle outbound data in one of two ways. They either transfer the packets via the infrastructure of third parties such as carriers that charge them for the service, or in the case of major players such as Google, they use their own global networks. The latter approach doesn’t involve paying fees to outside providers, but the likes of Google still need to cover the expense of maintaining a global networking footprint.

Providers have passed on the cost to customers in the form of bandwidth fees that are usually well below a cent per gigabyte of data transferred. That’s not much at first glance, but for enterprises with large-scale cloud environments, a few fractions of a cent here and there can add up massively over time.

Cloudflare will cut the bill by reducing the expenses incurred by cloud providers upstream. Google, Microsoft and the providers in the Bandwidth Alliance will start routing egress traffic generated by Cloudflare’s customers to the vast network that powers its content delivery network, which already handles around 10 percent of global Internet traffic. The company’s infrastructure is made up of over 150 “points of presence” that are linked to thousands of networks all over the world.

The task of optimizing transfer costs will be carried out by Argo, a homegrown traffic management system that Cloudflare brought online last year. The company is promising an up to 75 percent reduction in outbound traffic costs for Microsoft Azure and Google Cloud Platform. Cloudflare has already been offering the discounted data rates to customers of the latter platform for a while now under a three-year-old partnership with Google, which is not a member of the Bandwidth Alliance. 

The smaller providers that have joined the Bandwidth Alliance, in turn, will make egress data transfers completely free. The group includes IBM Corp., DigitalOcean Inc., WordPress.com operator Automattic Inc. and a number of other players.

Notably absent from the list is Amazon Web Services Inc., the leader in the public cloud infrastructure market. Cloudflare Chief Executive Officer Matthew Prince told TechCrunch that his company has held talks with AWS and will work to expand the Bandwidth Alliance going forward.

In a blog post, Prince said he sees Cloudflare customers eventually saving as much as $50 million per year in cloud bandwidth fees thanks to the group. Just as important, lowering outbound data transfer fees will reduce the barrier to migrating large workloads from one platform to another. This should give enterprises more freedom in how they implement their cloud strategies. 

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