Editor of 7am News Bruce Simpson explains why his site moved offshore:
We had hoped that we could use the 7am.co.nz server to handle the local (NZ) sites and the 7am.com server to handle the rest - but unfortunately it has become extremely difficult to convince some sites to switch away from the vastly more expensive NZ site. As a result we're burdened with a huge IP bill for international traffic each month and the only way to ensure that the .nz site isn't going to absorb all our funding is to move everything to the US server.
I can understand why NZ costs are so high - we're a long way from the rest of the world and given the huge growth rate in the demand for international digital bandwidth, prices have to not only cover the cost of providing the service but also include a margin for future expansion.
If anyone has any doubt about the need for us to use a US-based server just do the math - 40GB times $0.50/MB - that's about NZ$20,000 per month! By locating our servers in the USA we're able to cut that cost to just US$1,750 per month - as well as providing a much higher level of service to our international users.
To be effective, the 7am News ticker must load quickly and reliably - this requires that our servers have a very fast and direct Net connection.
Our US-based servers have a 100Mb/S connection to the ATMNet backbone in the USA - that's around twice the entire bandwidth coming into New Zealand - there's no way, even if we could afford the costs, that we could support the levels of traffic we're currently generating if we were hosted in NZ.
While there are a growing number of NZ ISPs claiming to offer "flat rate" hosting for Web sites - without exception they all reserve the right to start charging extra for volume on any site which they consider to be "high traffic" - besides which we (as a country) still have that old bandwidth problem. While providers such as IHUG are claiming to have over 25Mb/S of bandwidth - much of that is satellite-based and therefore only works on down-link data and isn't available for the out-bound IP generated by locally hosted Web sites.
New Zealand-based hosting is fine for low-traffic sites, especially those which are primarily servicing the local market - but once you move into the high-volume, global market then there's no way anyone can justify basing such a system outside of the USA."
7am News moved offshore to reduce its data transfer costs and increase the bandwidth of its connection to the Internet. As a web surfer, you might wonder what's the problem with that.
The obvious problem is that NZ jobs move overseas and the brain drain from NZ continues. Less obvious is that New Zealanders now download the 7am News from the USA thus increasing import traffic on the international data links. It costs 7am News less to send their data to a NZ web surfer from the USA than from within New Zealand! However, the reverse is not true. It costs your ISP much more for data imported from the USA than data produced locally. Therefore, by moving overseas, 7am News has shifted the cost of international data transfer to its New Zealand customers.
With the current cost structure, the data-trade-deficit will only increase. NZ web surfers (and their ISP's) will continue to pay for an increasing amount of imported data, even if that data is of local origin. This will make New Zealand a client-only-nation to the USA-server in the global digital economy.
A low-cost link from New Zealand to the rest of the internet would help reduce the data-trade-deficit, but perhaps a change in the cost structure would be needed to entice the likes of 7am News back to New Zealand.
Undersea cables such as the proposed "Southern Cross" have matched fiber-pairs, one for each direction of data travel. The best use of this resource is to balance incoming and outgoing traffic. As we have seen, the current cost structure discourages content providers from using the export side and encourages them to use the import line instead of local distribution. What is required is pricing that encourages data-export and encourages local content providers to remain in New Zealand.