On Optimal Sizing of Tiered Network Services

We develop an economic model for networks offering tiered services and we formulate the problem of selecting the service tiers from three perspectives: one that considers the users´ interests only, one that considers only the service provider´s interests, and one that considers both simultaneously, i.e., the interests of society as a whole. We also present dynamic programming algorithms that solve these problems optimally. Our work provides a theoretical framework for reasoning about Internet tiered services, as well as a practical toolset for network providers to develop customized menus of service offerings.