Congestion-dependent pricing of network services
IEEE/ACM Transactions on Networking (TON)
The Mathematics of Internet Congestion Control (Systems and Control: Foundations and Applications)
The Mathematics of Internet Congestion Control (Systems and Control: Foundations and Applications)
Pricing Communication Networks: Economics, Technology and Modelling (Wiley Interscience Series in Systems and Optimization)
Forward contracts for complementary segments of a communication network
INFOCOM'10 Proceedings of the 29th conference on Information communications
Resource pricing and the evolution of congestion control
Automatica (Journal of IFAC)
SLA-controlled interconnection charging in next generation networks
Computer Networks: The International Journal of Computer and Telecommunications Networking
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Congestion-dependent pricing is a form of traffic management that ensures the efficient allocation of bandwidth between users and applications. As the unpredictability of congestion prices creates revenue uncertainty for network providers and cost uncertainty for users, it has been suggested that forward contracts could be used to manage these risks. We develop a novel game-theoretic model of a multiprovider communication network with two complementary segments and investigate whether forward contracts would be adopted by service providers. Service on the upstream segment is provided by a single Internet service provider (ISP) and priced dynamically to maximize profit, while several smaller ISPs sell connectivity on the downstream network segment, with the advance possibility of entering into forward contracts with their users for some of their capacity. We show that the equilibrium forward contracting volumes are necessarily asymmetric, with one downstream provider entering into fewer forward contracts than the other competitors, thus ensuring a high subsequent downstream price level. In practice, network providers will choose the extent of forward contracting strategically based not only on their risk tolerance, but also on the market structure in the interprovider network and their peers' actions.