Ex-post internet charging: An effective bandwidth model

Abstract

Generally Internet Service Providers (ISPs) have charged their customers flat fees for their Internet connections. This has resulted in frequent congestion for many users. There are many different approaches to address this problem. Effective utilization of scarce resources is important to managers in the telecommunications industry, and thus usage-based pricing has become an important tool to address this problem-since it does not require large capital expenditures. In this paper we develop an ex-post charging mechanism based on the effective bandwidth concept. This model, effectively characterizes the utilization and burstiness of a user in a single metric. Further, we introduce a novel market for buffer size. In this market users purchase a specific buffer size from their ISP. Our model directs users with bursty traffic to purchase larger buffers, while users with well-behaved traffic are directed to purchase smaller buffers. From a resource usage standpoint, this is also the appropriate decision. We conduct computational experiments to show the viability of this approach, and also discuss real-world implementation issues. © 2007 by Springer Science+Business Media, LLC.