A two-component spot pricing framework for loss-rate guaranteed Internet service contracts

Author

Gupta, Aparna ; Zhang, Lingyi ; Kalyanaraman, Shivkumar

Author_Institution

Decision Syst. & Eng. Syst., Rensselaer Polytech. Inst., Troy, NY, USA

Volume

1

fYear

2003

fDate

7-10 Dec. 2003

Firstpage

372

Abstract

The technological advances in recent years are allowing Internet Service Providers (ISPs) to provide quality of service (QoS) assurance for traffic through their domains. This article develops a spot pricing framework for intra-domain expected bandwidth contract with a loss based QoS guarantee. The framework accounts for both the cost and the risks associated with QoS delivery. A nonlinear pricing scheme is used in pricing for cost recovery; a utility based options pricing approach is developed for risk related pricing. The application of options pricing in Internet services provides a mechanism for fair risk sharing between the provider and the customer, and may be extended to price other uncertainties in QoS guarantees.

Keywords

Internet; bandwidth allocation; contracts; costing; digital simulation; pricing; quality of service; risk management; ISP; Internet Service Providers; Internet service contracts; QoS assurance; QoS delivery; Quality of Service; cost recovery; domain traffic; intradomain expected bandwidth contract; loss based QoS guarantee; loss-rate guarantee; nonlinear pricing scheme; risk related pricing; risk sharing; risks; technological advances; two-component spot pricing framework; utility based options pricing approach; Bandwidth; Character generation; Contracts; Costs; Pricing; Quality of service; Systems engineering and theory; Telecommunication traffic; Uncertainty; Web and internet services;

fLanguage

English

Publisher

ieee

Conference_Titel

Simulation Conference, 2003. Proceedings of the 2003 Winter

Print_ISBN

0-7803-8131-9

Type

conf

DOI

10.1109/WSC.2003.1261446

Filename

1261446