Why is simcity 5's server problems so extreme?

Because they made the game an always online DRM instead of offering that as an option and not a requirement. They say they did that you provide a more realistic experience while you play in cooperation with your neighbors and also to prevent torrents of the game. But all they did was make an online game that their servers don't have the capacity to run. You mean to say that will all the preorders and the 10 years of waiting they underestimated the amount of servers needed. EA wanted to make money and they don't care how they do it.

It is EA, plain and simple. They have a history of providing poor customer experience and show habitual signs of incompetency on a large scale. This is just another entry in their long list of frequently occurring issues that they never seem to fix. They are a company that habitually bullies and ignores consumers. You are at their mercy and have to just hope that they change their pattern and actually get the game running right (not just servers, but problems with the game itself).

It seems to me that the SALES department and the Software Engineers responsible for data center capacity planning did not talk. They have way too many users, of which all want to use the game on the first days, and not enough bandwidth at the data centers to handle the traffic. Over the next 3 months, either their server capacity issues will be fixed, or the user desire to play the game will decline such that the data traffic issues will stabilize.

Bottom line - The popularity of Simcity exceeds the expectations of the company.