anticipating the metering and settlement implications of the drive for internet quality of service...

Anticipating the Metering and Anticipating the Metering and Settlement Implications of Settlement Implications of the Drive for Internet Quality the Drive for Internet Quality of Serviceof Service

Joseph P. Bailey, Ph.D.Joseph P. Bailey, Ph.D.

<[email protected]><[email protected]>

Robert H. Smith School of Robert H. Smith School of BusinessBusiness

University of Maryland, USAUniversity of Maryland, USA

www.rhsmith.umd.edu/tbpp/www.rhsmith.umd.edu/tbpp/jbailey/pubjbailey/pub

© Joseph P. Bailey, 1998

OutlineOutline

Defining Quality of ServiceDefining Quality of Service Interconnection ModelsInterconnection Models Pricing PoliciesPricing Policies Interconnection and QoSInterconnection and QoS Analysis and ConclusionsAnalysis and Conclusions


Internet EconomicsInternet Economics

Research and Research and education in education in

ensuring the self-ensuring the self-sustaining sustaining

economic growth economic growth of the Internetof the Internet


Quality of Service (QoS)Quality of Service (QoS)

User-definedUser-defined End-to-End service is often requiredEnd-to-End service is often required Heterogeneous applications have Heterogeneous applications have

different bandwidth requirementsdifferent bandwidth requirements Network separates different classes of Network separates different classes of

traffic (no longer traffic (no longer justjust best effort service) best effort service) Trade-off of different quality metrics is Trade-off of different quality metrics is

possiblepossible


QoS ProtocolsQoS Protocols

Internet Protocol version 4 (IPv4)Internet Protocol version 4 (IPv4)• ReSerVation Protocol (RSVP)ReSerVation Protocol (RSVP)• Real Time Protocol (RTP)Real Time Protocol (RTP)

Internet Protocol version 6 (IPv6)Internet Protocol version 6 (IPv6)

how these technologies will be diffused is how these technologies will be diffused is unknown and requires proper economic unknown and requires proper economic

incentivesincentives


Interconnection ModelsInterconnection Models

Peer-to-Peer BilateralPeer-to-Peer Bilateral Hierarchical BilateralHierarchical Bilateral Third Party AdministratorThird Party Administrator Cooperative AgreementCooperative Agreement

sizesizeexperienceexperiencetechnologytechnologycustomer basecustomer base}}

Interconnection increases social Interconnection increases social welfare, but benefits (and prices) are welfare, but benefits (and prices) are

often asymmetric!often asymmetric!


Pricing PoliciesPricing Policies

Flat-RateFlat-Rate Capacity-BasedCapacity-Based

• pricing based upon expected usepricing based upon expected use Usage-SensitiveUsage-Sensitive

• pricing based upon actual usepricing based upon actual use• accounting and settlementsaccounting and settlements


Comparison of Comparison of Interconnection ModelsInterconnection Models

PPeeeerr--ttoo--PPeeeerrBBiillaatteerraall

HHiieerraarrcchhiiccaallBBiillaatteerraall

TThhiirrdd PPaarrttyyAAddmmiinniissttrraattoorr

CCooooppeerraattiivveeAAggrreeeemmeenntt

EExxaammpplleess IISSPP--IISSPP IIAAPP--IISSPP MMAAEE--EE FFIIXXNNeettwwoorrkkEExxtteerrnnaalliittiieess

mmuuttuuaallllyybbeenneeffiicciiaall

aassyymmmmeettrriicc ––mmoorree bbeenneeffiicciiaallttoo tthhee ssmmaalllleerrffiirrmm

ppoossiittiivveeffeeeeddbbaacckk

ppoossiittiivveeffeeeeddbbaacckk

CCoossttss eeqquuaall sspplliitt ssmmaalllleerr ffiirrmmppaayyss mmoorree

aallll ffiirrmmss ppaayyttoottaall ccoosstt ++pprrooffiitt

aallll ffiirrmmss ppaayyttoottaall ccoosstt

AAggrreeeemmeenntt ccoonnttrraacctt ccoonnttrraacctt ccoommmmoonn ccaarrrriieerr ccoommmmoonn ccaarrrriieerrAAccccoouunnttiinngg ppoossssiibbllee ppoossssiibbllee pprroobbaabbllee nnoott lliikkeellyyBBeesstt EEffffoorrtt PPrriicciinnggPPoolliicciieess

ccaappaacciittyy--bbaasseedd,,uussaaggee--sseennssiittiivvee,,aanndd ffllaatt--rraattee

ccaappaacciittyy--bbaasseedd,,uussaaggee--sseennssiittiivvee,,aanndd ffllaatt--rraattee

uussaaggee--sseennssiittiivvee,,ccaappaacciittyy--bbaasseedd

ccaappaacciittyy--bbaasseedd,,ffllaatt--rraattee

RReesseerrvvaattiioonnPPrriicciinngg PPoolliicciieess

uussaaggee--sseennssiittiivvee uussaaggee--sseennssiittiivvee uussaaggee--sseennssiittiivvee uussaaggee--sseennssiittiivvee


Tragedy of the Internet Tragedy of the Internet Commons?Commons?

Without pricing there is no incentive Without pricing there is no incentive to ask for a lower quality of serviceto ask for a lower quality of service

There may not be enough high-There may not be enough high-quality service for all who request itquality service for all who request it

Pricing may fluctuate with demand Pricing may fluctuate with demand for optimal allocation of bandwidthfor optimal allocation of bandwidth

Incentive to artificially congest your Incentive to artificially congest your network?network?


Plan for QoS adoptionPlan for QoS adoption

Identify adoption of new technologies Identify adoption of new technologies within your organizationwithin your organization• Will you adopt QoS?Will you adopt QoS?• When will you adopt?When will you adopt?

Enter bilateral contracts specifying QoS Enter bilateral contracts specifying QoS parametersparameters• price, bandwidth, TCP protectionprice, bandwidth, TCP protection

Do not enter into contracts that extend Do not enter into contracts that extend beyond your technology horizonbeyond your technology horizon


ConclusionsConclusions

All models of interconnection agreements All models of interconnection agreements may be vulnerable to opportunismmay be vulnerable to opportunism

Trust between parties may alleviate the Trust between parties may alleviate the need for usage-sensitive pricing, however...need for usage-sensitive pricing, however...

Usage-sensitive pricing will become more Usage-sensitive pricing will become more pervasivepervasive• accounting and billing standards neededaccounting and billing standards needed• prices that provide proper incentives must be setprices that provide proper incentives must be set

anticipating the metering and settlement implications of the drive for internet quality of service...

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