aparna contractswitching

8/10/2019 Aparna ContractSwitching

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June 27, 2007 FIND Meeting, 2007 1

From Packet-Switching to Contract-Switching

Aparna Gupta

Shivkumar Kalyanaraman

Rensselaer Polytechnic Institute

Troy, NY

Murat YukselUniversity of NevadaReno

Reno, NV


2/18


Implied ChallengesMotivation

Current problems:

Userscannot express

value choices at

sufficient granularity

only at access level

Providersdo not haveeconomic knobs to

manage risks involved in

investing innovative

QoS technologies and business relationships

with other providers

flexibility in time:forward/optionpricing

flexibility in space:user-defined inter-

domain routes

capability toprovide e2e higher

quality services

money-backguarantees,

risk/cost sharing


3/18


Contract-switching: A paradigm shift

Circuit-switching

Packet-switching

Contract-switching

ISPA

ISP

C

ISP

B

e2e circuits

ISP

A

ISP

C

ISP

B routabledatagrams

ISP

A

ISP

C

ISP

B contractsoverlaid onroutable

datagrams


4/18


Basic Building Block: Intra-domain dynamic

contracts An ISP is abstracted as a set

of contract links

Contract link: an advertisablecontract

between peering/edgepoints i and j of an ISP

with flexibility of advertisingdifferent prices for edge-to-edge intra-domain paths

Contract components Performance component

Time component

Financial component


5/18


A Contract-Switched Network Core

Contracts: a practical way to

manage value flows Technologies to support

QoS

Economic considerations for

service definition anddelivery Scalability, Efficiency and

Fairness

Contract timescales

Cost recovery Pricing the risk in QoS

guarantees

Single-domain and end-to-endcontracts


6/18


Pricing End-to-end QoS Contracts

End-to-end contract characterized by

source-destination (s-d) pair other specifications, eg. QoS specs, contract duration

Two-component pricing model (Pe= Pbw+ lV*)

Pbwcomponent for cost recovery (single domain and e-2-e)

V* component for risk management of QoS assurance lprovides appropriate scaling between Pbwand V*

Balance between customer demand for vanilla bandwidth and

additional QoS assurance

Determined by cross sensitivity between demand for vanilla

bandwidth and additional QoS guarantees

Develop to handle complexity and offer efficiency - improve

profitability, risk sharing, customer welfare, and utilization


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Pricing Bandwidth for Cost Recovery

Nonlinear pricing model to recover providers cost

Bandwidth purchase cost from constituent ISPs

Fixed cost to setup and maintain transit nodes

Price schedule responds to customer demand

Categorization based pricing for complexity management

Distancefrom sto d: hop counts h

Speedof traffic from sto d: bottlenecks b

Bandwidth pricing problem:

max Consumer Surplus + Revenues - Total Costs

. . Revenues Total Costss t



Pricing of Risk in End-to-end QoS Guarantee

Single-domain contracts stitched to create end-to-

end QoS assured contracts

Risks in end-to-end QoS assurance from

Constituent contracts

Stitch nodes Risk management using pricing

Contract with NISPs

Intra-domain contracts specified with

End-to-end contract

Definition of end-to-end contract (QoS assurance)

Pricing strategies

0 0, , , ( , , )i u u ii i i i it T G V G t T

0 0, , , ( , , )u ut T G V G t T



Model for Pricing Risk in End-to-end QoS

Price specified by contract: sdpair

QoS (Loss) guarantee

Temporal characteristics, etc

determined by lowest priceover all likely

concatenations to deliver between sdpair

*( )uV S

* ( )uV S

uS

uS

,

,{ , }

path

,N

,

path

,N

,

min min ( )

. .

, 0

u

i r N

u

i i r N r bh S V

i r

u u u

i r

i r

u u

i r

V S V

s t S S S

S S



Putting it togetherContract switching,

Routing, Financial Engineering

End-to-end QoS services

Contract Routing

Pricing

Risk management tools

Spot contracts

Forward contracts

Options on Forward Flexibility to innovate

services



Thank you!

Questions/Comments?



Definition of End-to-end Loss Guarantee

Type of contract

The per minute loss rate of the customers data over contract

duration Tstarting from t0does not exceed

Constituents of end-to-end loss

Definition of end-to-end loss guarantee

( ).u ui

S S

N

,contract ,contracti j

i j

l l l

,N

contract

u u u

i

i

S S S


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Pricing of Risk in Loss Guaranteed Intra-

domain Services

Sample Contract:The per minute maximum loss rates are less than 0.5% (Si

u)

over the contract duration of 1 hour.

Per Minute Loss Rate lt:

Provision of loss based QoS guaranteed services is risky.

Due to the uncertainties caused by the competing traffic.

Outcome of loss process in favor o for againstthe provider.

60

,1

, 60

,1

.t jj

i t

t jj

Ll

I


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Pricing of Risk in Loss Guaranteed Intra-

domain Services

Payoff defined as

where is the upper barrier (providers promised lossrate guarantee), and is the indicator function defined as

Price for the risk:

where -- total number of minutes of the contract duration,

-- the risk neutral measure from providers SPD.

(0,1)( ) ,

u

t t tY I l l S

ifotherwise

1, ;(0,1)0, .

u

tl SI

5%0.uS

(0,1)

0( ) ,

N

uo Q t t V E I l l S

Q

(0,1)I

N


15/18


Pricing of Risk Using State Price Density

Price of Riskneeds to be assigned for unhedgeable risk.

State Price Density (SPD)

(3)

SPD describes a representative providers preferences forthe future outcomes of the loss process.

Assumptions of the providers preference:

The provider would expect losses to be rare events.

The provider would not get rewarded for large losses.

Two alternative forms of SPD functions:

A monotonously decreasing SPD.

A SPD peaking at a positive loss rate.

,

where is the .

ss

kk

s

pq

p

p state price


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Constructing a State-Price Density

p1

p2

p3

T=0 T=1

0 Mb

1 Mb

100 Mb

5c

1c

0c

5/6

1/6

0/6

Ten such time steps with (8, 1, 1) realization of each outcome imply a value of

8*5/6 + 1*1/6 + 1*0/6 = 41/6.


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Sample Choice of State-Price Densities

Study price evolutions with

differentSPDs

Network settings

Capacity

Customers traffic It

the AggregateAt

Sample SPDs

SPD 1: Exp(0.02)SPD 2: Beta(1.5, 100.5)

SPD 3: Beta(1.5, 167.2)

SPD 4: Beta(1.05, 100.95)


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Price Variations with Different SPDs

A decreasing SPD (SPD 1)produces per formance

based prices.

A SPD that does not

reward zero losses

produces congest ion

sensi t iveprices.

Among the beta SPDs,

the SPD that rewards

higher for smaller losses

is more favorable to the

provider.

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