Pricing and Regulation Quality of Experience

Project Type: Master/Diploma Thesis
Student: Wahlmüller Stefan
Mentor: Gernot Kubin


 The current Internet is experiencing an enormous traffic growth partially caused by the emergence of new interactive media services (e.g., Voice over IP or video streaming). Paired with the Internet Service Providers’ (ISPs) difficulties for gaining new revenues through prevailing flat-rate pricing models and inrobust alternatives, this situation has obtained an economic dimension hampering the investments in future network technologies or capacity improvements. This thesis aims at tackling these problems by establishing a novel concept centering the price and quality decisions on the customers’ quality perceptions, i.e., Quality of Expe- rience (QoE). For this purpose, we investigate a Quality of Service (QoS) differentiation mechanism based on Paris Metro Pricing (PMP), which in the second step integrates QoE aspects. Our models encompass three actors: a monopolistic ISP offering Internet access to users and an independent regulator. The regulator controls the fraction of the premium service class and may influence the ISP’s pricing decisions. Our findings demonstrate that it is economically desirable for ISPs in terms of revenue to base the price discrimination on QoE. From the inclusion of QoE aspects to the traffic classification process we can observe an significant increase on user utility, although the demand is even further stimulated. Hence, our proposal may contribute to the currently ongoing Net Neutrality (NN) debate. Current and further work advance the present model by capturing competitive situations and effects of (in-) elastic traffic, as well as by further detailing the mapping between QoS and QoE parameters.