Limits to Certainty in QoS Pricing and Bandwidth

Abstract

This paper explores the relationship between certainty of bandwidth and certainty of price for Internet services over a statistically shared network. Both are important policy objectives. Certainty of bandwidth is necessary if the Internet is to serve as a platform for advanced communications, information and entertainment services, or even for telephony. Certainty of price is important for universal service. More specifically, we illustrate that certainty of bandwidth and certainty of price are mutually exclusive in a statistically shared network (of which the Internet is the canonical example).

Section 2 of this paper outlines the importance of certainty of price and how it might be achieved.

Section 3 explains the importance of certainty in bandwidth and how different QoS protocols impact variations in bandwidth. Here, we use standard queuing models to show that increasing certainty in bandwidth results in decreased certainty in price. Conversely, setting a constant price with cost-based pricing in a statistically shared network results in delay. This is followed by a discussion of market evidence for this inverse relationship between certainty of price and certainty of bandwidth. Finally, we present conclusions and implications to be considered by policy makers.