Dynamic behavior of differential pricing and quality of service options for the internet

Peter C. Fishburn, Andrew M. Odlyzko

Research output: Contribution to journalArticlepeer-review

37 Scopus citations

Abstract

The simple model on which the Internet has operated, with all packets treated equally, and charges only for access links to the network, has contributed to its explosive growth. However, there is wide dissatisfaction with the delays and losses in current transmission. Further, new services, such as packet telephony, require assurance of considerably better service. These factors have stimulated the development of methods for providing Quality of Service (QoS), and this will make the Internet more complicated. Differential quality will also force differential pricing, and this will further increase the complexity of the system. The solution of simply putting in more capacity is widely regarded as impractical. However, it appears that we are about to enter a period of rapidly declining transmission costs. The implications of such an environment are explored by considering models with two types of demands for data transport, differing in sensitivity to congestion. Three network configurations are considered: (1) with separate networks for the two types of traffic, (2) with a single network that provides uniformly high QoS, and (3) with a single physical network that provides differential QoS. The best solution depends on the assumptions made about demand and technological progress. However, we show that the provision of uniformly high QoS to all traffic may well be best in the long run. Even when it is not the least expensive, the additional costs it imposes are usually not large. In a dynamic environment of rapid growth in traffic and decreasing prices, these costs may well be worth paying to attain the simplicity of a single network that treats all packets equally and has a simple charging mechanism.

Original languageEnglish (US)
Pages (from-to)123-136
Number of pages14
JournalDecision Support Systems
Volume28
Issue number1
DOIs
StatePublished - Mar 2000

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