Dynamic Overlay Single-Domain Contracting for End-to-End Contract-Switching

The Internet’s simple design resulted in huge success in basic telecommunication services. However, in terms of providing end-to-end QoS services, the Internet’s architecture needs major shifts since it neither allows (i) users to indicate their value choices at sufficient granularity nor (ii) providers to manage risks involved in investment for new innovative QoS technologies and business relationships with other providers as well as users. To allow these much needed economic flexibilities, we envision contract-switching as a new paradigm for the design of future Internet architecture. Just like packet-switching enabled flexible and efficient multiplexing of data, a contract-switched inter-network will enable flexible and economically efficient management of risks and value flows with more tussle points. We show that economic flexibilities can be embedded into the inter-domain designs by concatenating single-domain contracts and this framework can be used to compose end-to-end QoS-enabled contract paths. Within such a framework, we also show that financial engineering techniques (e.g. options pricing) can be used to manage risks involved in inter-domain business relationships. We address implementation issues for dynamic pricing over a single domain by outlining a congestion-sensitive pricing framework Distributed Dynamic Capacity Contracting (Distributed-DCC), which is able to provide a range of fairness (e.g. max-min, proportional) in rate allocation by using pricing as a tool.