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NANOG Meeting Presentation Abstract

How Many Tiers? Pricing in the Internet Transit Market
Meeting: NANOG53
Date / Time: 2011-10-11 12:00am - 12:00am
Room: Millennium Hall
Presenters: Speakers:

Vytautas Valancius, Georgia Institute of Technology

A Ph.D candidate at Georgia Institute of Technology, advised by professor Nick Feamster. His research interests include interdomain routing and Internet economics. Prior to his Ph.D studies, Vytautas built a few large networks, earned CCIE, and obtained M.S. from KTH, Sweden and B.S. from Vilnius University, Lithuania.

Nick Feamster, Georgia Institute of Technology

Nick Feamster is an assistant professor in the College of Computing at Georgia Tech. He received his Ph.D. in Computer science from MIT in 2005, and his S.B. and M.Eng. degrees in Electrical Engineering and Computer Science from MIT in 2000 and 2001, respectively. His research focuses on many aspects of computer networking and networked systems, including the design, measurement, and analysis of network routing protocols, network security, anonymous communication systems, and adaptive streaming media protocols. His honors include award papers at SIGCOMM 2006 (network-level behavior of spammers), the NSDI 2005 conference (fault detection in router configuration), Usenix Security 2002 (circumventing web censorship using Infranet), and Usenix Security 2001 (web cookie analysis).
Abstract: ISPs are increasingly selling "tiered" contracts, which offer Internet connectivity to wholesale customers in bundles, at rates based on the cost of the links that the traffic in the bundle is traversing. Although providers have already begun to implement and deploy tiered pricing contracts, little is known about how to structure them. Although contracts
that sell connectivity on finer granularities improve market efficiency, they are also more costly for ISPs to implement and more difficult for customers to understand. Our goal is to analyze whether current tiered pricing practices in the wholesale transit market yield optimal profits for ISPs and whether better bundling strategies might exist. In the
process, we offer two contributions: (1)~we develop a novel way of mapping traffic and topology data to a demand and cost model; and (2)~we fit this model on three large real-world networks: an European transit ISP, a content distribution network, and an academic research network, and run counterfactuals to evaluate the effects of different bundling
strategies. Our results show that the common ISP practice of structuring tiered contracts according to the cost of carrying the traffic flows (eg{}, offering a discount for traffic that is local) can be suboptimal and that dividing contracts based on {em both traffic demand and the cost of carrying it} into {em only three or four tiers} yields near-optimal profit for the ISP.
Files: pdfHow Many Tiers? Pricing in the Internet Transit Market(PDF)
youtubeHow Many Tiers? Pricing in the Internet Transit Market
Sponsors: None.

Back to NANOG53 agenda.

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