Can ISPs be Profitable Without Violating Network Neutrality?

1. Can ISPs be Profitable Without Violating Network Neutrality? Amogh Dhamdhere Constantine Dovrolis Georgia Tech

2. Disclaimer This is not a game theory talk Amogh Dhamdhere NetEcon 2008

3. The Network Neutrality Debate • Recent Trend: Large amounts of video and peer-to-peer traffic on the Internet • Access Providers (AP) deliver content to users • Recent trend: Not profitable • Flat rates, commoditization of Internet access • Content providers (CP) generate the content • Profitable (think Google) • Tension between AP and CPs: “Network neutrality” debate • Traffic shaping/prioritization by ISPs Amogh Dhamdhere NetEcon 2008

4. A Technical View • Previous work • Mostly non-technical • Emotional debates in the press, painting APs as villians • But what about the underlying problem: Non-profitability of Access Providers? • Our approach: A quantitative look at AP profitability • Investigate reasons for non-profitability • Evaluate strategies for the AP to increase profit Amogh Dhamdhere NetEcon 2008

5. Modeling AP Profitability • Three AS types: AP, CP and transit provider (TP) • Focus on the AP • AS links • customer-provider (customer pays provider) • peering (no payments) • AP and CPs can transfer traffic either through customer-provider or peering links CP CP CP CP CP CP TP CP CP AP Amogh Dhamdhere NetEcon 2008

6. Baseline model • AP and CP connect to the TP as customers • N users of AP, charged a flat rate R ($/month) • Flat rate prices decrease due to competition • Transit pricing: 95th percentile of traffic volume • 95th / mean = 2:1 for normal traffic, 4:1 for video1 • More video means higher transit payment by AP • AP users: Heavy tailed distribution of content downloaded per month • High variability in AP costs 1Norton’06: Internet Video: The Next Wave of Massive Disruption to the U.S. Peering Ecosystem Amogh Dhamdhere NetEcon 2008

7. AP Strategies – Charging • Charging strategies • AP charges “heavy hitters” according to volume downloaded • AP caps heavy hitters • AP charges CP (non-network neutral) • Charging strategies are disruptive • AP users may depart, depending on existing competition • Parameter d determines shape of departure probability curve • AP cannot control customer departure probability Amogh Dhamdhere NetEcon 2008

8. AP Strategy – Charging Heavy Hitters • Threshold T to identify heavy downloaders • Charge “by volume” for heavy hitters • c(D) = D*R/T, where download amount D, threshold T, flat rate R • Customer departure probability depends on T and d • AP’s profit is sensitive to customer departure probability • For some values of d, no threshold gives larger profit than baseline !! Amogh Dhamdhere NetEcon 2008

9. AP Strategies - Connection • Connection Strategies • AP caches content from CPs • AP peers selectively with CPs • Goal: Save transit costs paid to the transit provider • Does not increase the AP’s revenue • Non-disruptive • AP does not risk losing customers Amogh Dhamdhere NetEcon 2008

10. AP Strategy – Cache CP Content • AP caches content from some CPs locally • Saves transit costs, as content is served locally • Increases local costs incurred by the AP • Critical parameters: Fraction of content that can be cached (h) and cost incurred for caching (s) • Live content cannot be cached! • Profit is sensitive to h, s Amogh Dhamdhere NetEcon 2008

11. AP Strategies – Peering with CPs • Peering selectively with Content Providers can save transit costs, without risk of losing its users • But, peering is not free • Fixed, traffic dependent costs • Peering cost classes for CPs • “Low”: CPs at the same geographical location/IXP • “Medium”: CPs at nearby location/IXP • “Hard”: CPs in different continents • Cost benefit analysis: r = Estimated benefit/Estimated Cost • Peer if r > R Amogh Dhamdhere NetEcon 2008

12. AP Strategies – Peering with CPs • Optimal point exists for the cost-benefit threshold R • AP controls the factor R • Significant reduction in AP costs with selective peering • Greater benefit with fewer CPs (more traffic from the largest CPs) • AP can leverage expansion by large CPs Amogh Dhamdhere NetEcon 2008

13. Conclusions • Network Neutrality research should also focus on the underlying problem: Non-profitability of ISPs • How can ISPs be profitable in spite of increasing traffic, heavy-hitter users and video traffic ? • Charging schemes that target heavy hitters may not work in the presence of competition in the AP market • Profit highly sensitive to customer departure probability • Out of the AP’s control • Connection strategies such as peering selectively with Content Providers seem promising • Completely under the AP’s control Amogh Dhamdhere NetEcon 2008

14. Thank You ! Amogh Dhamdhere NetEcon 2008

15. AP Strategy – Capping Heavy Hitters • AP caps download rate for users • Limits the total amount of traffic handled • Saves transit costs and local costs, but does not increase revenue • AP profit depends on customer departure probability • For some values of d, no threshold gives larger profit than baseline !! • No significant improvement over baseline Amogh Dhamdhere NetEcon 2008

16. AP Strategy – Charging CPs • AP directly charges the top sources of content (CPs) • Increases revenue, but violates “network neutrality” • Subject to customer departure due to discriminatory practices • AP profit depends on customer departure probability Amogh Dhamdhere NetEcon 2008