Pricing activity within ARMOR project: present and future
Last update: November 27, 2003
Introduction to pricing
Pricing is a good example of a multi-disciplinary research activity
half-way between applied mathematics, economy and networking.
Indeed, the Internet is facing a tremendous increase of its traffic volume.
As a consequence, real users complain that large data
transfers take too long, without any possibility to improve this by
themselves (by paying more, for instance). A possible solution to cope
with congestion is to increase the link capacities; however, many
authors consider that this is not a viable solution as the network must
respond to increasing demand (and experience has shown that demand of
bandwidth has always been ahead of supply), especially now that the
Internet has become a commercial network. Furthermore, incentives to a
fair utilization between customers are not included in the current
For these reasons, it has been suggested that the current flat-rate
fees, where customers pay a subscription and obtain an unlimited usage,
be replaced by usage-based fees. Besides, the future Internet will carry
heterogeneous flows such as video, voice, email, web, file transfer and
remote login among others. Each of these applications requires a
different quality of service (QoS): for example, video needs very small
delays and packet losses, voice requires small delays but can afford
some packet losses, email can afford delay (within a given bound) while
file transfer needs more a good average throughput and telnet requires
small round-trip times. Some pricing incentives should exist so that
each user doe not always choose the best QoS for her application and so
that the final result is a fair utilisation of the bandwidth. On the
other hand, we need to be aware of the trade-off between engineering
efficiency and economic efficiency; for example, traffic measurements
helps in improving the management of the network but is a costly option.
Pricing has then emerged as a hot topic in the telecommunication world, receiving
a lot of attention. Among major projects involved in this research area, we can quote
Pricing activity within ARMOR
The pricing activity started in 2001 in ARMOR.
The active members are
- Bruno Tuffin, CR INRIA;
- David Ros, Assistant Professor at ENST-Bretagne;
- Yezekael Hayel, PhD student (thesis started 10/02),
working on multiclass pricing for service differentiation;
- Patrick Maille,
PhD student (thesis started 10/02), working on auctioning for bandwidth, and more generally on applying game theory
to network pricing;
- Ricardo Orozco, PHD student (thesis started 10/03), working on the practical aspects of pricing
(design of protocols and architectures).
We coordinate the PRIXNET INRIA ARC, cooperative
research action with MISTRAL project, France Telecom, Prism laboratory (University of Versailles-St Quentin)
and IBM (Watson research center). We especially have a strong collaboration with Mistral project, which might
be involved in our future research activities.
The results we have obtained up to now have focused on the theoretical part of the pricing scheme design.
See also the list of publications of our group on this topic.
- We have obtained several results on auctions for bandwidth. In this context, second price auctions (where the bidders
pay the price of those excluded from the game by their presence) have been proved to be incentive compatible and efficient (in
terms of social welfare). We have extended the initial work developed at Columbia University by N. Semret in different ways.
One of our main contributions is the multi-bids auction scheme
where the players submit several bids simultaneously, instead of
one iteratively until an equilibirum is reached, saving then a lot of signaling overhead,
while preserving the optimality and incentive comptatibility properties.
- We have also obtained several results on multi-class pricing, where classes are served differently according to their
associated prices. We have studied such schemes for several scheduling strategies: processor sharing,
priority queuing and separate queuing (also called paris Metro pricing).
We have especially shown that, in order to maximize its revenue, a provider should rather use priority queuing
(see pricing and scheduling paper). Other schemes such as to so-called Cumulus where positive
or ngative points are awarded to the users, depending on the respect of their contract, have also been analyzed and could fit
to the DiffServ architecture for instance.
- As a last subgroup of contributions, we have worked on pricing as a service differentiation means in
TCP/RED buffers, where the drop probability is made dependent
on the willingness to pay of the users. We have obtained conditions under which an equilibrium could be obtained.
Of course, we are also open to other research directions in this area.
- We plan to strengthen our network pricing activity in the next four
years. This requires further mathematical modeling and analysis of
different possible pricing schemes:
- Auctioning for bandwidth requires additional investigations. We are working on an extension of our
multibid auction scheme to a whole network. Designing protocols devoted to this scheme is also a planned goal.
- pricing TCP/RED buffers requires also more work. We plan, among other possibilities, to look at parameter values
allowing stability in the system, by using automatic control theory. This would be a extension to the existing
litterature on TCP/RED buffers,
with the willingness to pay (or utility function) of the users as an additional input.
- On multiclass pricing, we plan to work on other scheduling strategies (discriminatory processor sharing...) for fixed
pricing, but also on dynamic pricing, where the price will vary with the level of congestion of the network.
- Finally we plan to compare mathematically those pricing schemes in terms of provider revenue, social welfare and fairness
(when this notion is relevant).
- Second, all pricing
models include a "utility function" representing the service valuation by the
users. In the literature, stringent assumptions are imposed on this function for the
sake of convenience but that might not represent the actual demand and
lead to non-optimal prices. Based on tests and in collaboration with the Qualitative Quality Assessment
sub-group of ARMOR project,
we plan to estimate this function based on "real-world" data, that is,
considering subjective measures from real users. This would require
extensive testing since we do not need the mean opinion score, but
rather the whole distribution with respect to some specified parameters.
To the best of our knowledge, most of the work on network pricing
reported in the literature is of a theoretical nature. However, the
deployment of pricing schemes on a real network arises some interesting
technological problems, for instance:
- The design and implementation of protocols for dynamic pricing (for
example, protocols for tariff distribution and negotiation).
- The integration of pricing and metrology tools, that may be needed to
deploy complex usage-based pricing schemes.
- The integration of pricing methods into a service differentiation
architecture (like the IETF's DiffServ).
Therefore, we also intend to put these methods in practice, to test
and to compare them on an experimental platform in order to select the
most likely to be implemented at large scale as a compromise between
efficiency and simplicity.
Finally, up to now this activity has focused on wired networks, but we aim at extending
it to wireless and ad hoc networks, dealing
both with theoretical modeling issues and with practical and implementation
issues like in the case of wired networks.
- Indeed, third generation of
wireless networks, such as the UMTS network, will have to deal with demanding
applications in terms of bandwidth and QoS requirements. Even if the
capacity has increased with respect to the networks of second
generation, demand is supposed to be so important that
congestion pricing will probably be the most relevant means to control
and manage the traffic (for instance watching a movie
on a terminal would require the capacity of an entire base station).
- Following the same lines, there must be in an ad hoc network some
incentives to forward traffic of other nodes. Without associated pricing
scheme, choosing to not
participate in the network may be in the (short-term) interest of a
node, meaning to not exepend energy without
receiving any direct gain from doing so. Pricing is then a concept
that will introduce incentives for collaboration into the architecture.
- Also, in the current situation, owners of private WiFi networks often
choose to encrypt their networks to prevent outsiders from accessing
them. Many of these base stations could be used to allow Internet access
to a much larger set of users. Pricing would be a mechanism to
incentivize owners of existing private wireless base stations to open
their networks to the public, as well as incentivize institutions to
deploy base stations in order to obtain ubiquitous WiFi coverage.