1. Peter Key peterkey@microsoft.com http://research.microsoft.com/network/disgame.htm Service Differentiation: Congestion Pricing, Brokers and Bandwidth Futures

2. Sine qua non... Differential Services / QOS  Differential pricing!

3. Outline Background Background Congestion Pricing Congestion Pricing A game …. A game …. Commodity markets and Futures Commodity markets and Futures

4. Access to / Control of Scarce Resources Airline seats, electrical power, economic wealth Airline seats, electrical power, economic wealth Are networks any different? Are networks any different? Control technologies not independent or implementation /economics Control technologies not independent or implementation /economics ATM: eg sensible relative tariffs, ATM: eg sensible relative tariffs,  CBR 1, VBR 2, ABR.1, UBR.01, … result?

5. Resource system (‘network’) Resource j  Capacity C j User /route r   A jr links users to resources

6. Freebyte The network is free most of the time! The network is free most of the time! Only pay when busy (incremental cost, small) Only pay when busy (incremental cost, small) … aka Congestion Pricing … aka Congestion Pricing  Send a signal to users when traffic that should not be carried enters (moveable threshold)

7. Basic Idea Users generate load (packets) Users generate load (packets) Network sends back signals (load dependent) Network sends back signals (load dependent) Signals : proportional to load Signals : proportional to load  Act as feedback indicators  Represent pricing signals  marginal incremental costs (derivatives …)  congestion costs  real money or virtual / distributed mint

8. Matching Prices to Load Theorem: For linear increase multiplicative feedback flow control family, cannot have demand =capacity if prices are bounded for fixed capacity and arbitrary number number of flows. If prices are unbounded (bad!) then can have demand  capacity as number of flows increase, Else: Match willingness to pay to price capacity

9. Sample Path Shadow Prices C 12345678910 Time Capacity pkts C slotted time

10. Shadow path shadow prices - buffered model B B Pkts

11. Optimisation Framework (for fairness) System optimum User optimum C is cost function,eg Consistent set of taxes (prices) and load exist s.t. user opt = social opt.

12. Example - elastic control eg

13. Applications Virtual Private Networks Virtual Private Networks Non-TCP apps Non-TCP apps  Web  Media  MBONE Tools, RealMedia, Netshow Real application uses (like a DB) Real application uses (like a DB)

14. Aggregates All the channels in a VPN connection All the channels in a VPN connection Audio/Video/Data in a conference Audio/Video/Data in a conference “Working set” for web server “Working set” for web server Policy based routers/firewalls Policy based routers/firewalls

15. Aggregates: Audio / Video Policy scheduler Network User/ end system

16. Network vs Users “My work is a game, a very serious game” Escher Users Signals Data/Info Network

17. Flow Control and Marking Strategies Definition: The phenotype of an individual plant or animal … or flow-control scheme … is a consequence of the interaction between its genotype and the environment in which it exists

18. Distributed Multi-player Game Internet MSR Cambridge

19. Example Game Transfer a given amount of data F at minimum cost in time T Transfer a given amount of data F at minimum cost in time T Strategies: Strategies:  CBR,  if stationary regime, optimal if price “convex” in region (lightly loaded)  else, have to predict fluctuations

20. WTP vs TCP

21. The User interface … Must be simple!

22. Guaranteed Flows / Streams? Probabilistic guarantees OK, provided proportion of adaptive traffic adequate Probabilistic guarantees OK, provided proportion of adaptive traffic adequate Just a question of risk - brokers (cf fixed rate mortgages) Just a question of risk - brokers (cf fixed rate mortgages) Futures market: Futures market:  a reservation is a (European) call option for an amount of bandwidth, where fair price = Integral of expected price over expected life- time

23. Bandwidth Exchanges 9 Inteconnection operators (clearing houses, brokers etc) 9 Inteconnection operators (clearing houses, brokers etc) Band-X, London 1997 Band-X, London 1997 RateXchanges, anonymous, RateXchanges, anonymous,  PSTN voice, VOIP, b/width

24. Is Bandwidth Commodity? commodity commodity  A physical substance, such as food, grains, and metals, which is interchangeable with other product of the same type, and which investors buy or sell, usually through futures contracts. Or more generally, a product which trades on a commodity exchange futures contractstradesfutures contractstrades Originally, basic, unrefined (wheat not flour) Originally, basic, unrefined (wheat not flour)

25. Commodity Markets History repeats itself … (Fora Vendalia) History repeats itself … (Fora Vendalia) Japanese forward contract in 1730 for rice Japanese forward contract in 1730 for rice  In China 4000BC??? Chicago forwards 1833+, cash markets Chicago forwards 1833+, cash markets Standards (quality / quantity evolved …) Standards (quality / quantity evolved …) Options on futures, 1983 Options on futures, 1983 Forward contracts aimed at delivery, now only a few % complete Forward contracts aimed at delivery, now only a few % complete

26. Futures and Auctions Market efficient? (Sorros ….) Market efficient? (Sorros ….) Commodity prices highly random (small trend) Commodity prices highly random (small trend) Auctions: FCC holds b/width auctions Auctions: FCC holds b/width auctions

27. Futures pricing Assume current rate p t Assume current rate p t Fair price for European option at time t lasting expected time T given current spot price s=p 0, (constant load) Fair price for European option at time t lasting expected time T given current spot price s=p 0, (constant load)

28. Second Price Auctions Suppose users are prepared to pay amount per packet, (eg fixed data, maximum cost), if price goes above this, will drop out Suppose users are prepared to pay amount per packet, (eg fixed data, maximum cost), if price goes above this, will drop out In a mixed environment, those left pay this clearing price In a mixed environment, those left pay this clearing price ie Vickrey auction via congestion pricing ie Vickrey auction via congestion pricing

29. Timescales Connection Reaction (RTT) Packet Level average rate Seconds line rate ms  s ApplicationNetwork msms  s Critical timescale

30. Critical timescales

31. Facilitators Small buffers (compared to transmission delay) Small buffers (compared to transmission delay) Target loads below 100% … Target loads below 100% … Simple feedback signal, eg ECN bit/byte Simple feedback signal, eg ECN bit/byte Signal reflects costs but … Signal reflects costs but … User interface simple (risk apportionment) User interface simple (risk apportionment)