Analysis of price competition under peering and transit agreements in ISP to P2P users

CCNC 2011 Las Vegas, 11 January Luis Guijarro

Agenda
Objective Models Method Results and analysis

Objective
To model ISP service provision to P2P users To model peering agreements between ISPs To analyze equilibrium under competition between ISPs in local markets
N

Internet (IBP)
Bd1 Bp1 Bd2

ISP1
Bp2 1

ISP2

n1

n2

Service model
Basic service model
ISPi
vi M/G/1-PS
(1- vi) vj

i =niqi

ISPj
Bpi

aborted

M/G/1-PS
solved at Internet

IBP
Bdi
4

aborted

Service model
Basic service model
Assumptions
Internal downloads always complete successfully Link dimensioning is such that links are 100% utilized Users are impatient and no bandwidth is wasted

Performance metrics

i i = = i N , n, i , Bid , Bip i

)
5

Service model
Unlimited peering service model
vi

ISPi

i =niqi

(1- vi) vj

ISPj

M/G/1-PS
solved at Internet

IBP
Bdi
6

aborted

Service model
Unlimited peering service model
Assumption relaxed
Link dimensioning is such that
Transit links are 100% utilized Peering links are not Peering capacity is large enough so that downloads are always completed successfully

More realistic and a limiting case

Demand and supply model

Demand Utility Supply Income
Flat-rate

U i log( i + 1) pi = U i ( pi , i )

Costs
Fixed peering costs Transit costs proportional to bandwidth

Profits

i =

d d pi ni Ci Bi

Ci

p
8

Method
Game theory
Multi-leader-follower game
The 2 ISPs fix their prices pi in order to maximize profits Each user subscribe to the ISPi which offers higher utility Ui

Solved by backward induction

First, solve subscription game Then, solve competition game anticipating the reaction by users.
9

Method
Game theory
Multi-leader-follower game
Subscription game
Wardrop equilibrium Assume n is high enough Equilibrium is reached when there is no incentive to change subscription decision Assume that every user subscribe to service

U 1 ( p1 , 1 ) = U 2 ( p 2 ,1 1 )
10

Method
Game theory
Multi-leader-follower game
Competition game
Nash equilibrium The operator does not know the strategy chosen by the competitor, but space of available strategies are common knowledge
* * p1 = arg max 1 ( p1 , p 2 ) p1 * * p 2 = arg max 2 ( p1 , p 2 ) p2
11

Results and analysis

Constant parameters
# of users, N and n Transit capacity Bd1 Costs
N=5e7

Internet (IBP)
Bd1=1000 Bd2 Bp1

Variable parameters
Peering capacities Transit capacity Bd2 Bp
i

ISP1
Bp2 1

ISP2

n1

1 n=1e4

n2

12

Results and analysis

Results
Market shares i Quality of service i Prices pi User utilities Ui Profits i Price of Anarchy PoA
Social welfare PoA
the sum of the utilities of all agents in the system (n1U1+n2U2+1+2) the quotient between the maximum value of the social welfare and the social welfare obtained at the Nash equilibrium i.e., PoA >=1

13

Results and analysis

Transit link provisioning
Objective
Competitive advantage
Internet (IBP)
Bd1=1000 Bp1=10 Bd2 N=5e7

Experiment
Bd2 varies from 100 to 2000 objects per day
1

ISP1
Bp2=10

ISP2

n1

1 n=1e4

n2

14

Results and analysis

Transit link provisioning
Results
ISP2 gains market share and improves QoS ISP1 looses market share although improves QoS
Free riding

Users are better off

15

Results and analysis

Transit link provisioning
Results
ISP2 can raise prices and increases profits ISP1 should lower prices and reduces profits

Conclusion
The provisioning is effective
16

Results and analysis

Transit link provisioning
Objective
Social welfare
N=5e7

Internet (IBP)
Bd1=1000 Bp1 Bd2

Experiment
Bd2 varies from 100 to 2000 objects per day Bpi takes different values: 10, 50 and
ISP1

ISP2
Bp2

n1

1 n=1e4

n2

17

Results & analysis

Transit link provisioning

Results
PoA increases quasilinearly with the absolute value of (Bd2+Bp2)-(Bd1+Bp1) PoA decreases as the peering capacities increase

Conclusion
The provisioning causes welfare loss

18

Results and analysis

Increasing competition
Objective
User utility

Experiment
Increasing the # of ISPs (M) Restrictions
Bd and n are kept constant Bdi=Bd/M

19

Results and analysis

Increasing competition
Results
User utility increases Profits decrease

Conclusion
Users are better off and ISPs are worse off

20

Conclusions
Analysis based on an explicit model of the ISP service that is provided to users that run P2P applications Study of transit link provisioning
It is effective, but causes welfare loss

Study of increasing competition

Benefits users, but hurts competitors

21