In order to reduce costs and make it easier to integrate disparate systems, networked and virtual organizations (NVOs) should adopt open technology standards throughout the entire organization—standard computing architectures, standard networks, and standard application interfaces. The Internet protocol (IP) technology has been foreseen as a basic networking infrastructure that supports communication requirements of NVOs. With the growing demand for the integration of heterogeneous telecommunication services (e.g., voice, data, video and multimedia), there is a strong need for deploying quality of service (QoS) in IP-based networks. Under such circumstances, the flat pricing models that have been satisfying in traditional best-effort Internet so far do not encourage users to make reasonable use of resources. QoS differentiation introduces a clear need for incentives to be offered to users to encourage them to choose the service that is most appropriate for their needs. In commercial networks, this can be most effectively achieved through pricing. Falkner, Devetsikiotis, and Lambadaris (2000) and Da Silva (2000) supplied comprehensive reviews and evaluation of pricing schemes developed during the nineties and mainly related with per-flow IP QoS approaches, such as the integrated services (IntServ) specified by Braden, Clark, and Shenker (1994). Proliferation of the differentiated services framework, since the late 90s posed a number of new issues and resulted in novel proposals for pricing IP QoS and network resources.
Key Terms in this Chapter
Effective Bandwidth: A measure of resource usage, which takes into account statistical characteristics of the traffic source type and the QoS requirements.
Differentiated Services (DiffServ): A scalable IP QoS architecture, which assumes marking and grouping of packets with similar QoS requirements to the same traffic aggregate (class), which is then processed in the same manner at the network nodes. Complex processing of individual traffic flows is performed at the edge routers, while simple and fast forwarding operations are performed at the core routers over aggregate flows.
Traffic Engineering: An aspect of IP network engineering and exploitation, which deals with requirements for network performance analysis, evaluation and optimization.
Pricing: The process of allocating tariff, i.e., cost per unit of resource. It is based on particular pricing scheme and controlled by a pricing policy. Static pricing assumes that price is independent on actual network resource utilization. With dynamic pricing, the price is determined as a cost per unit of resource consumption and according to level of QoS guarantees provided for the particular service class.
Traffic Conditioning: QoS mechanism which may involve packet marking, metering, testing with contracted profile, shaping and dropping. In the DiffServ network, it is performed at the edge routers.
Service Level Agreement (SLA): A contract between the service provider and the user (either end user or another domain), which defines provider’s responsibilities in the sense of QoS guarantees, performance metrics, measurement methods, tariffs and billing principles, as well as penalties for both the user and the provider in the case of contract violation.
Accounting: The process of monitoring, measuring and collecting of resource usage information, related to a single customer’s service utilization. It provides the accounting data, which represent the collection of resource consumption data, for the purposes of pricing, charging and information provisioning.
Charging: The process of determining the amount to be charged for use of a resource, based on tariff and the accounted data.
Billing: The process of producing an invoice on the basis of charging data.