Analysis of service provider´s profit by modeling customer´s willingness to pay for IP QoS

This paper analyzes the monetary profit for service providers according to QoS schemes in IP network services. First, we model the relationship between the QoS in transferring data in IP networks and the amount that customers are willing to pay (WTP) for the QoS based on utility theory, and we verify the model by a subjective experiment in Web page access. The model explains that WTP is an upper limit decreased by some power of the data transfer QoS. Secondly, by using the WTP model, we demonstrate that a best-effort service has an upper limit on accommodating customers to increase the provider´s profit, and the profit tends to increase as the provider´s network-scale becomes larger. Thirdly, we show that a service with QoS priority control is more effective at improving the profit than only a best-effort service, and the effect is especially noticeable for minor providers with a small market share.