Integrated economic model for design and adaptation of overlay networks

We consider overlay networks that lease bandwidth from underlying transport networks. Operators of such networks need an economic model that determines the required amount of leased bandwidth and its adaptation to changing environment in order to maximize the network profit. In this paper we discuss such an economic model that integrates optimization of the bandwidth allocation and adaptation with optimization of the routing and call admission control. This is done in the framework of Markov decision process theory which is a key element enabling the integration. The approach is generic in the sense that it is applicable for different underlying transport networks like WDM, SONET, MPLS. Also, it covers virtual networks as they can be seen as a special case of overlay networks. The numerical analysis validates the approach and shows that the profit can be maximized under varying network conditions.