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How do VPN providers manage to stay in business? (piefed.socdojo.com)

submitted 11 hours ago by ShellMonkey@piefed.socdojo.com to c/asklemmy@lemmy.world

20 comments fedilink hide all child comments

So I was just renewing a contract with a VPN provider, and paid out for a couple years it works out to somewhere under $2/month.

ISPs around me can run from about $50-$150/month

If I'm putting the major bulk of my traffic over a tunnel that could eat up a sizable chunk of a given connection point for the provider that I'm sure costs more than $2/month to maintain. I would have to assume it would take the combined subscriptions of several users to pay for a given node.

So how does that work as a business model? Unless these VPN providers are getting a steal on their connections it's hard to envision how they can manage to pay their costs without these nodes being absolutely bottlenecked when a few people start streaming some shows.

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[–] TAG@lemmy.world 17 points 11 hours ago (1 children)

With an ISP, you are not paying much for your bandwidth to the Internet. You are paying for connection between your house and their office. Your ISP has to maintain many miles of wire across your city. They also need to maintain equipment that can handle thousands of individual connections across many individual wires.

In comparison, a VPN provider just has a couple of very big connections going into their data center for pushing data in and out.

Plus, you likely have only a few choices of ISP (or only one choice), so your ISP can maintain a very healthy profit margin. With VPN providers, there is a ton of competition, so they have to charge you only a little above actual cost.

[–] shalafi@lemmy.world 8 points 10 hours ago

So much goes into that last mile of service.

SOURCE: Old cable internet guy.