Network pricing: can both ISP and P2P benefit?

Abstract

SummaryInternet service providers are facing increasing back pressure from rising access demand by users, especially peer‐to‐peer (P2P)‐based applications that greatly enhance the large‐scale distribution of content into and out of their networks. With the ever increasing consumption pressure on scarce bandwidth resources, ISPs have been forced to reconsider their business model of overselling ‘all‐you‐can‐eat’ broadband at flat rates. Technical solutions such as traffic differentiation or blocking violate the principle of network neutrality; traffic shaping and deep packet analysis fall short in the presence of encryption; and P4P (localized P2P)‐based solutions are difficult to achieve in a heterogeneous environment. Economically, various usage‐based pricing schemes have been proposed and discussed. While they can improve efficiency in bandwidth consumption, they tend to face strong customer resistance as users have strong preference in favour of simple flat rates. We argue that any feasible pricing reforms cannot deviate much from the current flat rates while providing financial incentives for bandwidth hogs to limit their bandwidth access. In contrast to normal usage‐based pricing models that charge by volume, we propose a temporal‐based pricing model that may generate a mutually beneficial solution that can not only increase the profitability of ISPs but also accommodate P2P, rather than killing it, without changing the software, protocols or hardware that clients or ISPs use on the network.Copyright © 2014 John Wiley & Sons, Ltd