A Simulation Study of Usage-Based Pricing Strategies for Packet-Switched Networks

With the Internet experiencing massive growth, new ways to recover ever rising costs and regulate network usage are becoming increasingly important. Several researchers have proposed pricing strategies and econometric models for regulating resource usage in a globally shared network environment. These approaches can take the form of simple \price setting", or can be more closely integrated with the admission control, congestion control, and bandwidth allocation functions of the network. This paper presents a simulation study of two proposed usage-based pricing strategies (one static, one dynamic) for computer networks. In the static pricing strategy evaluated, a price per packet is assigned and held constant over time. Results of the static strategy simulations show that network utilization decreases as the price per packet increases. Revenue, on the other hand, rst increases and then falls as the price per packet increases. In the dynamic pricing strategy simulations, the price varies over time as a result of user demand for bandwidth. As the number of users on the network increases, the price per unit of bandwidth increases. While the behavioural properties of the dynamic pricing scheme make it appear promising as a pricing framework for packet-switched networks, further work is clearly required to better address the tradeoos between network utilization, revenue, and network eeciency.