Internet Tiered Services

Theory, Economics, and Quality of Service

By: George N. Rouskas

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eText | 21 April 2009

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As telecommunications products and services have become an essential part of - eryday life, consumers have at the same time grown intimately familiar with the concept of tiered pricing that is associated with such services. With tiered service structures, users may select from a small set of tiers that offer progressively higher levels of service with a correspondingincrease in price. Tiered structures have been applied in several forms to wireless services (e. g. , characterized by the amount of voice minutes, number of text messages, or the size of one's circle of friends to whom voice calls are free), Internet broadband access (e. g. , the access speed or volume of monthly transferred data), and digital TV offerings (e. g. , the number of channels included), among others. Service tiering is a form of market segmentation which, if applied appropriately, bene ts both providers and consumers by making available services and associated price points that re ect the diversity in consumers' needs and ability to pay. The purpose of this book is to develop a theoretical framework for reasoning about and pricing Internet tiered services, as well as a practical algorithmic toolset fornetworkproviderstodevelopcustomizedmenusofserviceofferings. We provide a comprehensive study of the design, sizing, and pricing of tiered structures for - ternet services, and we illustrate their potential in simplifying the operation of c- plex components such as packet schedulers.