On the Economics of Interconnection among Hybrid QoS Networks in the Next Generation Internet

How do different QoS (Quality of Service) mechanisms affect the resource and quality allocations over the interconnection of the future Internet? What will be the consequences on the economics of interconnection and its settlements? These are important questions that arise with the evolution of the Internet as a network of QoS networks that support a variety of performance requirements. The convergence of various telecommunications networks relies critically on the interconnections of various networks and related QoS management and assurance. Furthermore, the heterogeneity of the proposed QoS support mechanisms intensifies the importance and integrity of these research questions related to the network interconnection. In this paper, we will address the economic problems of network resource management over hybrid-QoS networks. This study proposes that interconnecting QoS networks will manage both QoS pricing and QoS bandwidth allocation for optimal interconnection, and different QoS networks will have different optimal QoS allocation policies due to different marginal costs (marginal bandwidth opportunity cost) associated with each QoS mechanism and policy. These costs will be estimated from the results of network simulation using statistics of traffic flow measured from a current Internet backbone. This study also asserts that the QoS allocations of individual networks will be highly affected by the economizing behavior of interconnecting networks under uncertainty without commitment. We will use the statistical results of network simulation to present the numerical example of those cost functions with respect to the contracted QoS for DiffServ QoS networks. We also develop the network economic models that provide the means for bandwidth management. The model captures characteristic of opportunity costs and demands, and suggests the strategies on QoS pricing and allocation. By using these economic models, we numerically simulated the behavior of a DiffServ’s bandwidth broker to optimize its payoff strategies for practical assumptions. We expect that the implication of this paper will be useful to both ISP network planners and regulators concerning with the interconnection issues of the next generation Internet.