Peter Reichl

Pricing and Cost Recovery for Internet Services: Practical Review, Classification, and Application of Relevant Models

Suitable pricing models for Internet services represent one of the main prerequisites for a successfully running implementation of a charging and accounting system. This paper introduces general aspects influencing the choice of a pricing model in practical situations and presents a survey as well as a classification of relevant and advanced approaches to be found in the scientific literature. First performance results on charging extensions within the Internet are presented, which are completed by a set of market price simulations for dynamic pricing models within the same implementation environment. Based on cost model investigations some detailed insights into price and cost issues from an Internet Service Providers (ISP) point of view are given. Moreover, current challenges as well as problems are discussed in a practical context as investigated in the Swiss National Science Foundation project Charging and Accounting Technology for the Internet (CATI).

Management of differentiated services usage by the Cumulus pricing scheme and a generic Internet charging system

Since the Internet is on the move to provide differentiated services, for the backbone based on the differentiated services architecture (DiffServ), suitable management mechanisms are required. Scalable solutions for overload management are a must, such as economically-driven functions of charging and pricing. Future commercial networks need to offer as well a new view of pricing, considered as management information. Therefore, the Cumulus pricing scheme (CPS) explicitly proposed here for the DiffServ technology is the only approach known so far, which defines a clear relation between different time scales of measurement, accounting, and charging periods. The scheme is flexible enough to allow network management according to actual forces of the market. CPSs implementation is supported by a designed generic Internet charging system offering a service-independent architecture and integrating interchangeably economically-controlled network management functions of charge calculation and pricing. In particular, it has been applied to DiffServ and the new CPS.

Charging for differentiated Internet services

Internet communications today play a major role in data transport within the local as well as the wide area. On one hand, since emerging networked applications require a variety of different communication services, the number of service classes offered by service providers has to be targeted at this demand. On the other hand, assuming that a set of different traffic classes are offered by service providers, the right incentives have to be provided, ensuring that applications or their users select the most appropriate traffic class. Even though users are considered to be selective, they intend to chose that class which offers the best available Quality-of-Service (QoS), as long as the price to be paid does not exceed their willingness-to-pay. Therefore, charging for differentiated Internet services is important in a commercialized Internet. The current Internet does not cater for charging at all, since the technology required, the pricing models going beyond a flat-fee approach, and the appropriate efficiency in technical as well as economic terms are still missing on a global basis. This paper outlines the major problems for charging Internet services and describes briefly an important new solution for a pricing approach, which solves the Internet pricing feasibility problem. Based on these preconditions an Internet Charging System (ICS) is introduced, focusing mainly on its leading characteristics and its generic approach to instantiate for a given scenario.