Pricing Internet Services With Multiple Providers

One of the challenges facing the networking industry today is to increase the profitability of service providers. This calls for economic mechanisms that can enable providers to charge more for better services and collect a fair share of the resulting increased revenue. In this paper we present a generic model for pricing Internet services in a multi-provider network. We show that non-cooperative pricing is unfair and may discourage future upgrades of the network. As an alternative, we propose a simple revenue-sharing policy and show that it is more efficient and encourages providers to collaborate without cheating. We also suggest a scalable algorithm for providers to implement this policy in a distributed way and study its convergence properties.