Description of work
The recent growth of Internet has been marked not just by its fast pace, but also by the fact that Internet is a federation of separate cooperating IP networks rather than a single large developing infrastructure. At the same time, we have seen the tremendous growth and penetration of Web services. These services succeeded due to the almost zero marginal cost for their providers to add www applications to the existing fixed-price Internet access platform. Thus, each provision of an end-to-end service instance, is the outcome of the cooperation among multiple players. An imbalance in the risk vs reward for the participants threatens the cooperative outcome and in general the IP market. Therefore, the future Internet architecture should take into account such issues and the analysis of the corresponding economic issues is very important for both the functional success and the financial viability of the future Internet.
Economic mechanisms such as charging should provide users with the right incentives. Thus, while each user is acting according to his own best interest, the whole system is led to an efficient operating point. (Time-of-day charging in telephony is a traditional such a mechanism: by pricing calls placed during the peak period higher, a certain portion of the traffic is shifted to the off-peak, thus alleviating congestion during the peak period and calling for a less demanding network dimensioning.) Thus, the JRA will deal with the pricing schemes that should be implemented by Internet Service Providers (ISPs) so as to provide the right incentives to the customers by relating appropriately the charge to the each provider’s resources consumed and to QoS experienced by the end-user. This is very important, because today’s IP service framework lacks the means to compensate partnering service providers in proportion to their contribution of resources to an end-to-end service. Apart from offering the right incentives to users, the pricing scheme should also guarantee return on investment to the ISP and in general to each provider. That is, there is a need for mechanisms that allow the compensation for incremental investments in development and deployment of new services. Only such mechanisms can ensure that investments in service innovation and infrastructure development are rewarded and encouraged, which will maintain the viability and growth of Internet both as an infrastructure and as a market. This is particularly important, because in the recent years value-added service providers arbitraged the relatively low cost of Internet bandwidth, representing net market loss viewed from the perspective of conventional telecom service portfolios. Thus, incumbents network operators naturally seek to develop new service revenues to offset losses due to arbitrage of traditional portfolios. At the same time, new operators enjoyed a low barrier of entry and significant market shares, but eventually did not managed to build sustainable businesses. The successful evolution of next generation of services and revenues will depend on the online industry’s capability to sustain investment by all stakeholders, and affordable enough not to drive innovation out. The economic and business issues to be studied by the JRA should ultimately serve this strategic purpose. Furthermore, economic mechanisms can also serve as means to solve complex optimization problems by means of distributed decision-making. Recent research on networking has placed considerable emphasis on the analysis of a variety of problems under the assumption that the entities involved are self-interested and make independently decisions that affect others too. The most common objective when analyzing a game is to derive the Nash equilibrium from which no player has the incentive to unilaterally deviate, because each strategy is the best response to the profile of all others. in cases where there is also a social optimization performance goal (e.g. the overall throughput attained in a mobile ad hoc network), it is well known that this often is not attained at the Nash equilibrium. in other words, individual decision-making does not necessarily serve the social goal too. This mismatch is quantified by the price of anarchy, which equals the ratio of the social performance value under the Nash equilibrium divided by the optimal social performance value. Therefore, the partners of the JRA will study and integrate their research on a variety of models aiming to design such economic and incentive mechanisms in order to influence the strategies of selfish players towards serving the social goal and thus leading to a reduction of the price of anarchy. Such problems will concern (among others) the design and analysis of:
· A congestion control mechanism for traffic flows, each of which selfishly responds/adjusts to this mechanism.
· A pricing and routing mechanism for Autonomous Systems, each having to decide on a cost value to be announced regarding the transit traffic to be served, and/or on the type and the parameters of contracts with other ASs.
· A form of multi-party contracts providing ISPs with the incentives to comply with the QoS, resilience and other requirements of end-to-end services.
· A power control mechanism for nodes in a WiFi WLAN, balancing individual throughput with fairness objectives.
· An incentives mechanism (e.g. based on reputation and reciprocation) for nodes in a mobile ad hoc network, each having to decide on the level of transmission power, and on whether to relay or not a packets received by a neighboring node and destined to another node.
The partners of the JRA will also deal with and integrate their research on business models and SLAs. in particular, interesting multi-player business scenarios will be identified and the business models pertaining to them will be defined, by specifying the players involved in these models their individual economic interests and priorities, the economic relations among them, and their incentives. These models will give rise to the corresponding value-chains as well as to the SLAs properly serving the often contradicting requirements and incentives of the various players. Finally, these business and economic relations among players will be treated with a more long-term view, in order to identify the impact of the competition among ISPs and their strategic alliances with players offering complementary value-added services. This will result in integration of the partners’ research on models concerning the evolution of the telecom market, the resource and capacity planning required for ISPs for a successful positioning etc.