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8/10/2019 Aparna ContractSwitching
1/18
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
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June 27, 2007 FIND Meeting, 2007 2
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
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June 27, 2007 FIND Meeting, 2007 3
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
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June 27, 2007 FIND Meeting, 2007 4
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
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June 27, 2007 FIND Meeting, 2007 5
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
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June 27, 2007 FIND Meeting, 2007 6
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
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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
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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
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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
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Thank you!
Questions/Comments?
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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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June 27, 2007 FIND Meeting, 2007 13
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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June 27, 2007 FIND Meeting, 2007 14
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
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June 27, 2007 FIND Meeting, 2007 15
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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June 27, 2007 FIND Meeting, 2007 16
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.