J. Scott Marcus - NSF ITR Workshop on Scalable QoS SolutionsSlide 1April 10, 2002 End to End QoS NSF ITR Workshop on Scalable QoS Solutions NSF ITR Workshop on Scalable QoS Solutions J. Scott Marcus Senior Advisor for Internet Technology Federal Communications Commission (FCC) The opinions expressed are my own, and do not necessarily reflect the views of the FCC or the U.S. Government.

J. Scott Marcus - NSF ITR Workshop on Scalable QoS SolutionsSlide 2April 10, 2002 Privatization of the Internet (NSF 93-52) Copyright (c) 1999 by Addison Wesley Longman, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior consent of the publisher.

J. Scott Marcus - NSF ITR Workshop on Scalable QoS SolutionsSlide 3April 10, 2002 Peering and Transit n Peering is usually a bilateral business and technical arrangement, where two providers agree to accept traffic from one another, and from one another’s customers (and thus from their customers’ customers). Peering does not include the obligation to carry traffic to third parties. n Transit is usually a bilateral business and technical arrangement, where one provider (the transit provider) agrees to carry traffic to third parties on behalf of another provider or an end user (the customer). In most cases, the transit provider carries traffic to and from its other customers, and to and from every destination on the Internet, as part of the transit arrangement. n Peering thus offers a provider access only to a single provider’s customers; transit, by contrast, usually provides access at a defined price to the entire Internet. n Historically, peering has often been done on a bill-and-keep basis, without cash payments, where both parties perceive roughly equal exchange of value; however, there is often an element of barter.

J. Scott Marcus - NSF ITR Workshop on Scalable QoS SolutionsSlide 4April 10, 2002 Shortest Exit (“Hot Potato”) Routing Copyright (c) 1999 by Addison Wesley Longman, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior consent of the publisher. Backbone ISP New York Chicago Atlanta Dallas Los Angeles San Francisco Washington DC Web Site Shared Traffic Exchange Point Shared Traffic Exchange Point

J. Scott Marcus - NSF ITR Workshop on Scalable QoS SolutionsSlide 5April 10, 2002 A Hierarchical View of the Internet Backbone ISP Upstream Downstream Peering Connection cf. Lixin Gao Backbone

J. Scott Marcus - NSF ITR Workshop on Scalable QoS SolutionsSlide 6April 10, 2002 Analytical Framework n Define: c o as cost of origination c t as cost of termination a as an access charge levied on the sender n Due to shortest exit, c t > c o n Then cost for the originating network is c o + a cost for the terminating network is c t - a Network i Network j

J. Scott Marcus - NSF ITR Workshop on Scalable QoS SolutionsSlide 7April 10, 2002 Impact of Access Charges n Analysis of traditional PSTN (Laffont/Rey/Tirole) u In a bill-and-keep system, access charges are zero. u With equal access charges and symmetric traffic, net access charges are still zero. u Providers will, however, view their marginal costs quite differently. n Analysis of the Internet (Laffont/Marcus/Rey/Tirole) u The Off-Net Cost Pricing Principle: Providers will tend in general to charge as if all traffic were off-net, i.e. there are no significant incentives for price discrimination. u Difference between Internet and PSTN is largely that of a “missing price”. In the PSTN, no charge for receiving (wireline) traffic. u Provides an analytic framework for service quality differentiation. u Where a group of customers have distinguishable costs that are higher than those of other customers, the model predicts that marginal prices will be correspondingly higher.