Abstract
Various differentiated pricing schemes have been proposed for the Internet market. Aiming at replacing the traditional single-class pricing for better welfare, yet, researchers have shown that existing schemes can bring only marginal profit gain for the ISPs. In this article, we point out that a proper form of differentiated pricing for the Internet should not only consider congestion, but more importantly, it should provide application specific treatment to data delivery. Formally, we propose an “application-driven pricing” approach, where an ISP offers a number of service classes in terms of a guaranteed quality of service and announces a unit usage price for each class, and content providers are free to choose which class to use depending on the requirement of their applications. Unlike previous studies, we point out that the revenue gain of multi-class pricing under our scheme can be significant. This is because we capture important aspects of application heterogeneity and take the quality of service and price as control knobs. We identify key factors that impact the revenue gain and reveal fundamental understandings on when and why an application-driven multi-class pricing can significantly increase the revenue of ISPs.
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