1. The Direction of Value Flow in Connectionless Networks Bob Briscoe BT Research 19 Nov 1999

2. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value2 menu 4 why think about this? 4 the value of place 4 end-end pricing 4 common case value apportionment 4 end-end vs. iterative clearing context

3. pricingclearingscenariossummary 19 Nov 1999Direction of Value3 why think about this? 4 theory of the value of communications: connection-oriented hegemony [ITU96, Zull97, Clark96, MacKie-Var92] 4 confusion is abroad in the world junk advertising, bundling content+network 4 why assume multicast sender pays? 4 alternative proposal seems obvious but wasn't when I started context

4. pricingclearingscenariossummary 19 Nov 1999Direction of Value4 context 4 multiservice, multicast IP (real-time apps) 4 some services usage-charged, whether packet, flow or even longer term granularity [Briscoeb99] 4 electronic tariff announcement [Rizzo99, Yemini98, Carle98] 4 most general business model possible? 4 buyer's market 4 designed for bundling will cover in a future paper... context

5. pricingclearingscenariossummary 19 Nov 1999Direction of Value5 new model for what business? applic’n present’n session transport network link physical network link physical end-system router network link physical applic’n present’n session transport network link physical context e-commerce

6. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value6 the value of place 4 xmt value /leg =  (value of place-time) 4 but competition  cost+ margin pricing 4 who can know the value of place?  N: provider Y: end-users –  apportionment 4 clearing grows comms market i i value 1 = f(i, place 1, time 1 ) value 2 = f(i, place 2, time 2 ) i context

7. pricingclearingscenariossummary 19 Nov 1999Direction of Value7 top level architecture! rudimentary interface no use alone customer provider eg. unicast to customer of same provider pricing

8. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value8 end to end pricing price end-to-end pricing role service data flow customer A C ISPs B pricing

9. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value9 end to end pricing end-to-end pricing role price service data flow pricing

10. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value10 service service bundling data flow pricing

11. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value11 end-to-end pricing role 4 not necessarily a business; a role taken by: –one ISP –the customer –a third party (+ bundling content?) 4 openness to commercial innovation 4 but…...what is the best default apportionment?... pricing

12. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value12 default value apportionment 4 proposal: –'sender and receiver both charged' –slight discrepancy in prices possible –every leg of every flow is part charged twice –model self-similar for inter-domain boundaries pricing

13. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value13 split-edge pricing - per direction NaNa NbNb NcNc NcNc NdNd NdNd NeNe W bas W abr W abs W bar pricing 4 price in & out separately 4 each price between boundary and remote edge 4 price effects localised 4 contracts localised 4 global standards unnecessary 4 extends edge-pricing [Shenker96] 4 price in & out separately 4 each price between boundary and remote edge 4 price effects localised 4 contracts localised 4 global standards unnecessary 4 extends edge-pricing [Shenker96]

14. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value14 split edge pricing-per class 4 each class of service has a market 4 class mismatch effects localised 4 each class of service has a market 4 class mismatch effects localised pricing

15. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value15 split-edge pricing-per leg V QuQuQuQu QtQtQtQt QuQuQuQu QuQuQuQu QvQvQvQv QwQwQwQw QwQwQwQw NaNa NbNb NcNc NcNc NdNd NdNd NeNe W abr W bas W abs W bar 4 multicast & heterogeneous QoS 4 see sister paper for mathematical model 4 unicast, multicast and concast 4 multicast & heterogeneous QoS 4 see sister paper for mathematical model 4 unicast, multicast and concast pricing

16. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value16 cost approximation per domain 4 cf. weighted star net 4 cf. half circuit charging 4 covers costs on average 4 separate rcv & send prices fit asymmetric costs 4 cf. weighted star net 4 cf. half circuit charging 4 covers costs on average 4 separate rcv & send prices fit asymmetric costs pricing

17. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value17 9-24 +4-13 +11 -11 -81 +18 -11 -72 +25 -11 -73 17 -11 -82 37 -11 -84 Surplus: A: 2= 11 - 9 B: 1= 9 - 8 C: 1= 4 - 3 D: 4= 37 -33 E: 0= 17 -17 F: 3= 25 -22 G: 3= 18 -15 Tot:14=121-107 Surplus: A: 2= 11 - 9 B: 1= 9 - 8 C: 1= 4 - 3 D: 4= 37 -33 E: 0= 17 -17 F: 3= 25 -22 G: 3= 18 -15 Tot:14=121-107 interconnect example -10 -9 -14 9 9 9 10 -12 10 -12 12 -10 12 -10 14 -14 14 -14 15 -12 14 -11 14 -11 10 11 -14 10 11 -14 14 12 -15 pricing A B C D E F G 3 2 0 2 3 3 service money data Costs: half interconnect B=2, others=1 access F,G=7; A,D,E=8 Costs: half interconnect B=2, others=1 access F,G=7; A,D,E=8 14 9 10

18. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value18 default value apportionment 4 choose default to minimise clearing 8 'only senders' or 'only receivers' charged 4halve transaction volume? 8requires industry-wide co-operation 8unstable - mavericks gain and increase costs of all 8multicast requires trusted receiver count [Holbrook99 etc] 4 'both sender and receiver' charged 4majority of comms between consenting parties 4value, charge and cost congruent 4stable against maverick policies 8doesn't match blame for unicast transmission... pricing

19. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value19 blame, liability & control: multicast 4 joint blame for multicast is nice 4 but once receiver has joined… –e.g. surprise high QoS multicast traffic should receivers pay for this? 4 …problem same as for unicast… clearing host 1 host 2 host 3 sender receivers router 1 router 2 host 4 join

20. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value20 blame, liability & control: unicast 4 but…...sender always to blame for a unicast or for 'multicast surprises' 4 other confusions clarified: request-reply is irrelevant to network layer value of moving info transitory value of moving GBs is often for a few bits cost of xmt << cost of targeting what to xmt clearing

21. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value21 dilemma & solution 4 'sender and receiver both charged' vs. 'sender to blame' 4 receiver customarily pays...but... sender liable 4 cf. postage stamp sender customarily pays, but receiver liable clearing

22. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value22 clearing across edges: third party 150 51 5 5 49 clearing 2 3 12 46 44 service money 45 50 5 clearing

23. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value23 clearing across edges: third party 100 51 5 5 49 clearing 2 3 7 46 44 service money clearing

24. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value24 clearing across edges: iterative 3 7 46 44 100 51 44 service money 54 clearing

25. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value25 end-to-end model: justification 8 avoids Int'l Accounting Rate System flaws: 8muddling wholesale with clearing 8per-flow metering in backbone 8trusted end counting for multicast 8apportionment needs authentication therefore unaggregateable 8O(ac d+1 ) prices in system  6e26 clearing c  20,000 d  5 a = apportionment schemes per ISP  10 a = apportionment schemes per ISP  10

26. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value26 end-to-end model: justification II 4 localised contract jurisdiction clear what to meter decided locally only need bulk backbone metering 4 selective openness of clearing process 8 O(ac 2 ) prices problem still exists  4e9 but at least feasible clearing

27. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value27 customer bundling model 8 customer bundles together providers on end-to-end path 8 per-flow pricing 8high latency 8 contractual relations with arbitrary remote parties clearing

28. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value28 exception peering 4 exceptional failures –loss of a packet subject to reservation –excess delay of a low latency packet 4 no customer revenue 4 no recriminations between ISPs –no “who lost packet?” –no “who delayed packet most?” 4 assume peers sufficiently dimensioned clearing

29. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value29 scenarios 4 see paper for... 4 finding an end-to-end price 4 sender liable but local payment customary 4 inter-domain multicast with heterogeneous quality of service (QoS) 4 phone to Internet gateway (PIG) 4 per session accounting  bill=anachronism scenarios

30. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value30 PIG - phone to Internet gateways service money Internet end-end PSTN iterative 1 3 21 24 21 100 41 5 5 59 2 3 7 36 29 25 clearing PIG scenarios

31. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value31 connectionless value flow 4 split-edge pricing scales infinitely price effects localised no need for global pricing, accounting, metering standards no per flow metering away from edge no need for global contractual environment no such thing as trusted multicast receiver count? 4 'sender and receiver both charged' stable customary for unicast - but only sender liable telco model must not leak across PIG summary

32. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value32 alternative now seems obvious... 4 value flows outwards if unequal value, clear end-to-end implications for design of multicast diffserv 4 openness to commercial innovation 4 end-to-end intermediary could take 0-50% of retail ISP and telco markets...and their customer relationships summary

33. contextpricingclearingscenariossummary 19 Nov 1999Direction of Value33 further information 4 Differential charging (diffchar) project  http://www.labs.bt.com/projects/mware/ http://www.labs.bt.com/projects/mware/ 4 Bob Briscoe  http://www.labs.bt.com/people/briscorj/ http://www.labs.bt.com/people/briscorj/ more info