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Synthesis Lectures on Learning, Networks, and Algorithms Richard T. B. Ma Internet Transport Economics Synthesis Lectures on Learning, Networks, and Algorithms SeriesEditor LeiYing,ECE,UniversityofMichigan–AnnArbor,AnnArbor,USA The series publishes short books on the design, analysis, and management of complex networkedsystemsusingtoolsfromcontrol,communications,learning,optimization,and stochasticanalysis.EachLectureisaself-containedpresentationofonetopicbyaleading expert. The topics include learning, networks, and algorithms, and cover a broad spec- trumofapplicationstonetworkedsystemsincludingcommunicationnetworks,data-center networks, social, and transportation networks. Richard T. B. Ma Internet Transport Economics RichardT.B.Ma DepartmentofComputerScience NationalUniversityofSingapore Singapore,Singapore ISSN2690-4306 ISSN2690-4314 (electronic) SynthesisLecturesonLearning,Networks,andAlgorithms ISBN978-3-031-14420-2 ISBN978-3-031-14421-9 (eBook) https://doi.org/10.1007/978-3-031-14421-9 ©TheEditor(s)(ifapplicable)andTheAuthor(s),underexclusivelicensetoSpringerNatureSwitzerlandAG 2022 Thisworkissubjecttocopyright.AllrightsaresolelyandexclusivelylicensedbythePublisher,whetherthewhole orpartofthematerialisconcerned,specificallytherightsoftranslation,reprinting,reuseofillustrations,recitation, broadcasting,reproductiononmicrofilmsorinanyotherphysicalway,andtransmissionorinformationstorage andretrieval,electronicadaptation,computersoftware,orbysimilarordissimilarmethodologynowknownor hereafterdeveloped. Theuseofgeneraldescriptivenames,registerednames,trademarks,servicemarks,etc.inthispublicationdoes notimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexemptfromtherelevantprotective lawsandregulationsandthereforefreeforgeneraluse. Thepublisher,theauthors,andtheeditorsaresafetoassumethattheadviceandinformationinthisbookare believedtobetrueandaccurateatthedateofpublication.Neitherthepublishernortheauthorsortheeditorsgive awarranty,expressedorimplied,withrespecttothematerialcontainedhereinorforanyerrorsoromissionsthat mayhavebeenmade.Thepublisherremainsneutralwithregardtojurisdictionalclaimsinpublishedmapsand institutionalaffiliations. ThisSpringerimprintispublishedbytheregisteredcompanySpringerNatureSwitzerlandAG Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland Inmemoryofmygrandparents,whoaccompanied methroughoutmyentirechildhood. GRANDPARENTSANDMEONNANJING YANGTZERIVERBRIDGE1986. Preface The motivation behind the research that forms this monograph originated from the author’s recurring desire to understand the Quality of Service (QoS) of the Internet. Althoughthepacketswitchingparadigmenablesefficientutilizationofnetworkresources viaon-demandstatisticalmultiplexing,asacoredesignprinciple,theInternet’sbest-effort servicemodellacksperformanceguaranteefornetworkflows.Asaconsequence,provid- ing guaranteed QoS for network applications had been a holy grail for the networking research community around two decades ago. Although network architectures and proto- colssuchasIntServandDiffServwereproposedforautonomoussystemstocooperatively achieve guaranteed QoS, none of them got adopted by the Internet industry in reality. As the Internet has evolved into a content-centric platform, we have witnessed content providers(CPs),suchasNetflixandGoogle,makingeffortsofbuildingprivatebackbone networkstobypassTier-1ISPsanddirectlyconnecttolast-mileaccessproviderssuchas Comcast via private peering agreements. Through these efforts, one can argue that QoS could be and is indeed provided for certain applications to users over the Internet today. Nevertheless,thisbringsnewdisputesamongtheISPsandCPsovertheirinterconnection and peering agreements, which further concern the regulators about the neutrality and future evolution of the Internet. While the proposed solutions for guaranteeing QoS did not work primarily due to the lackofbusinessmodel,withoutwhichthecommercialISPswouldnothaveincentivesto adopt;thepracticalworkaroundsdobuildupbusinesscontracts,i.e.,peeringagreements. Nevertheless,inordertoresolvepeeringdisputesandaddresstheregulatoryconcerns,the open research questions still boil down to the fundamental understanding of how various impactfactorsinfluencetheresultingQoSofnetworkapplications,whichisamaintheme of this monograph. In particular, we will show that economics plays a fundamental role in characterizing the QoS and our study is built through a new lens of Internet transport economics. This monograph focuses primarily on the wired infrastructure of the Internet, e.g., the backbone networks of transit providers and the last-mile access providers. The Internet is regarded as a platform that connects content and/or service providers with their end- users. Although wireless/mobile networks and data center networks are not the focus vii viii Preface of this monograph, as they are playing important roles in today’s versatile Internet, we provide a discussion on how the presented models and results could be relevant under these contexts toward the end of this monograph. This monograph is organized into two parts. The first part provides the theoretical foundationoftheInternettransporteconomicsapproachtomodelandanalyzetheperfor- mance of the Internet. It includes four chapters. Chapter 1 provides an overview of the Internetviatwotraditionalperspectives:engineeringandbusiness,andanewperspective: transport. Chapter 2 introduces the basic principle of economics in terms of supply and demand,andestablishesaneconomicsviewoftheInternettransportecosystem.Chapter3 presents the main modeling and analyzes and Chap. 4 discusses related prior works and open research problems as future directions. The second part demonstrates how the presented theoretical models and results could be leveraged to understand various aspects of the Internet. In particular, Chap. 5 presents a stylized CP-AP model from the general theoreticalframeworkandintroducestwoequilibriumsolutionconcepts:congestionequi- libriumandrateequilibrium.Basedonthesederivedmodelandequilibriumconcepts,we analyze three problem domains: service differentiation, market structure and data pricing inChaps.6–8,respectively.InthefinalChap.9,wediscusshowthepresentedframework is relevant and could be applied to other problem domains such as data center networks, wireless mobile networks and the network neutrality debate. The expected audience include graduate students and researchers in the areas of com- puter networking and performance evaluation. While the technical contents are presented as mathematical modeling and results, we try to make the monograph self-contained. The technical details of the first part of the book are built upon the physical models of the Internet and Chaps. 1 and 2 provide necessary background knowledge and overview for the Internet and economics, respectively. The central analyzes are centered around various concepts of equilibrium and their characterizations such as existence and uniqueness. Implications of theoretical results are discussed under the context of Inter- net. Nevertheless, backgrounds in non-cooperative game theory, e.g., Nash equilibrium, and performance model, e.g., queueing theory, could be helpful for understanding the technical contents. Singapore Richard T. B. Ma December 2021 Acknowledgments This book is based on my works on network economics, a less traveled research journey started at the Chinese University of Hong Kong 20 years ago. I would like to thank my mentors and collaborators Prof. John C.S. Lui and Prof. Vishal Misra for having faith in meandofferingcontinuousencouragementandsupporttomealongthisjourney.Iwould like to thank Dr. Xin Wang, a long-term collaborator and a true friend. Your diligence, frankness and insightfulness have always been sources for my inspirations. Finally,IwouldliketothankSeriesEditor,Prof.LeiYing,whopersuadedmetowrite this book. Without your encouragement, I would not be able to complete this book. Kent Ridge, Singapore Richard T. B. Ma August 2022 ix Contents PartI MethodologicalFramework 1 ViewpointstotheInternet ............................................. 3 1.1 Engineering Perspectives .......................................... 3 1.1.1 Packet Switching .......................................... 3 1.1.2 Layered Architecture ....................................... 6 1.1.3 Edge Versus Core .......................................... 7 1.2 Business Perspectives ............................................. 8 1.2.1 Connectivity-Oriented Transit Services ....................... 9 1.2.2 Performance-Oriented Peering Contracts ...................... 10 1.2.3 Business Tussles and Regulatory Policies ..................... 11 1.3 Transport Perspectives ............................................ 12 1.3.1 Internet as a Transport System ............................... 12 1.3.2 Service and Performance ................................... 14 References ........................................................... 16 2 EconomicsViewsofInternetTransport ................................. 19 2.1 Principles of Economics .......................................... 19 2.2 Supply of Internet Transport ....................................... 21 2.3 Demand of Internet Transport ...................................... 25 References ........................................................... 26 3 EquilibriumCharacterization ......................................... 27 3.1 General Network Equilibrium ...................................... 27 3.2 Linear Lossy Networks ........................................... 31 3.3 Lossless Networks ............................................... 34 3.4 Peering Dispute: A Case Study .................................... 38 References ........................................................... 42 4 RelatedWorksandFutureDirections .................................. 45 4.1 Related Works ................................................... 45 4.2 Future Directions ................................................. 47 References ........................................................... 49 xi