Interprovider differentiated service interconnection management models in the Internet bandwidth commodity markets

Due to the recent evolution of telecommunications infrastructure and the Internet as a commodity market for bandwidth, Internet Service Providers (ISPs) encounter new issues concerned with bandwidth management for the network interconnection. Bandwidth commodity exchange is considered a new B2B (Business-to-Business) electronic commerce application that brings new market opportunities to carriers and service providers for managing their bandwidth resources. This paper develops market-based bandwidth management optimization models for Differentiated Service (DiffServ) QoS (Quality of Service) networks using an implementation of the bandwidth management agent, BMP (Bandwidth Management Point). We use network economic models to formulate an optimization problem for the interconnection and resource allocation policy of the DiffServ network. We formulate and develop those economic models as optimization problems of LP, NLP, MILP and mixed integer nonlinear programming (MINLP), and discuss the pricing mechanisms and available solution approaches for the implementation of the BMPʹs resource optimization process. Different opportunity costs are estimated based on the results of a network simulation using traffic flow statistics measured from a recent Internet backbone. We then numerically simulate the behavior of backbone network ISPs to optimize their profits for various demand scenarios.