A Constant Revenue Model for Telecommunication Networks

It is well known that the quality of service provided by a telecommunication network as measured by the probability of blocking decreases rapidly when the incident traffic exceeds the design limits of the network. A higher probability of blocking results in reduced throughput and loss of revenue for the service provider. This paper presents a mechanism that introduces priority in a telephone system with the objective of providing a defined grade of service to priority traffic carrying a higher price tag. The nonpriority traffic carries a lower price tag and a lower grade of service. The proposed pricing scheme maintains the overall revenue associated with the network at a constant level over a wide range of incident traffic.