Designing quality of service pricing strategies for ip based networks

In order to support the delivery of emerging network services, such as Voice-over-IP (VoIP), teleconferencing, video conferencing, and telemedicine, the Internet must provide classes of service that are better than the traditional best-effort class of service commonly seen in low-bandwidth applications, such as e-mail. In computer networks, Quality of Service (QoS) is defined as the mechanisms that allow differentiation of traffic and services based on their requirements. To provide QoS over the current Internet, the Internet Engineering Task Force (IETF) and others have proposed a number of architectures, including Integrated Service (IntServ) and Differentiated Service (DiffServ). However, pricing such QoS network remains as an open challenge. Determining the right pricing strategy will be important for the ultimate success of these new architectures. Traditional pricing of Internet services is based on economic models that focus on recovering costs or maximizing profits. To achieve these economic goals, various flat rate and dynamic (based on usage) pricing schemes have been developed but most of them suffer from the complexity and difficulty of the implementation. This research examines the basic issue of designing pricing models for Internet services at various quality levels. I developed a new pricing model that is based on a price-quality schema drawn from the marketing literature. Using this schema, I developed several price heuristic formulas that are further tested by simulation. By simulating a QoS network under conditions of various emerging applications, I defined and measured a quality index. This quality index is used in my pricing formula. I showed that service providers have a number of QoS variables that they can control, which in turn provide various levels of service that can maximize the revenue for the service provider. With the pricing scheme developed in this research, users can be charged for the service quality that they actually receive. The findings of this research suggest the need for additional research into both price perception and price determination under specific conditions unique to individual network service providers.