Risk-aware network profit management in a two-tier market

Abstract

We develop an optimization framework for the network carier to manage profit in a two-tier market environment, a retail market where bandwidth is provisioned to serve uncertain demand and a wholesale market where bandwidth is bought and sold as a commodity. Our model is built upon mean-risk analysis. We discuss the selection of a risk index that is consistent with a stochastic efficency criteria. We conduct numerical studies to investigate the influence of the carrier's risk averseness on bandwidth management, and profit implications of the bandwidth wholesale market.