Value Flows and Risk Management Architecture for Future Internet

1. Value Flows and Risk ManagementArchitecture for Future Internet Murat Yuksel yuksem@cse.unr.edu University of Nevada – Reno Reno, NV Aparna Gupta guptaa@rpi.edu Shivkumar Kalyanaraman shivkuma@ecse.rpi.edu Rensselaer Polytechnic Institute Troy, NY Project Website: http://www.cse.unr.edu/~yuksem/contract-switching.htm

2. Motivation Implied Challenges flexibility in time: forward/option pricing • Current architectural problems: • Users cannot express value choices at sufficient granularity – only at access level • Providers do not have economic knobs to manage risks involved in • investing innovative QoS technologies and • business relationships with other providers flexibility in space: user-defined inter-domain routes capability to provide e2e higher quality services money-back guarantees, risk/cost sharing

3. ISP B ISP A ISP B ISP C routable datagrams ISP A ISP C ISP B contracts overlaid on routable datagrams ISP A ISP C Contract-switching: A paradigm shift… e2e circuits Circuit-switching Packet-switching Contract-switching

4. A Contract-Switched Network Core • Contracts: a practical way to manage “value flows” • Technologies to Support QoS • Economic considerations for service definition and delivery • Scalability, Efficiency and Fairness • Contract timescales • Cost recovery • Pricing the risk in QoS guarantees • Single-domain and end-to-end contracts

5. Stations of the provider computing and advertising local prices for edge-to-edge contracts. Stations of the provider computing and advertising local prices for edge-to-edge contracts. Edge Router Edge Router Edge Router Customers Network Core accessed only by contracts Edge Router Edge Router Edge Router Basic Building Block: Intra-domain dynamic contracts • Contract components • performance component, e.g., capacity • financial component, e.g., price • time component, e.g., term

6. Contract Link • An ISP is abstracted as a set of “contract links” • Contract link: an advertisable contract • between peering/edge points i and j of an ISP • with flexibility of advertising different prices for edge-to-edge (g2g) intra-domain paths capability of managing value flows at a finer granularity than point-to-anywhere deals

7. How to achieve e2e QoS? • Contract Routing: • Compose e2e inter-domain “contract paths” over available contract links satisfying the QoS requirements • Calculate the contract paths by shortest-path algos with metrics customized w.r.t. contract QoS metrics • Two ways: • link-state contract routing at macro time-scales • path-vector contract routing at micro time-scales • Monitor and verify that each ISP involved in an e2e contract path is doing the job • Punish the ISPs not doing their job, e.g. as a money-back to the others involved in the e2e contract path

8. Link-State Contract Routing: Macro-level, proactive Most cost-efficient route ISP B 2 ISP A 1 4 User X 3 ISP C 5 Max QoS route

9. Path-Vector Contract Routing: Micro-level, on-demand, reactive • Provider initiates… [C-B-A, 5-4-2-1, 20Mb/s, 30mins, $7.3+3] [C-B, 5-4-2, 20Mb/s, 45mins, $6+$5] [C, 5-4, 30Mb/s, 45mins, $9] ISP B path announcement path announcement 2 ISP A 1 4 User X 3 ISP C path announcement 5 [C, 5-3, 10Mb/s, 30mins, $5] [C-A, 5-3-1, 5Mb/s, 15mins, $1.25+$1.2]

10. Path-Vector Contract Routing: Micro-level, on-demand, reactive • User initiates… [5, 10-30Mb/s, 15-45mins, $10] [5, A, 1-2, 15-30Mb/s, 15-30mins, $8] [5, A-B, 1-2-4, 15-20Mb/s, 20-30mins, $4] ISP B path request path request 2 reply reply [A-B-C, 1-2-4-5, 20Mb/s, 30mins] 1 4 ISP A User X reply 3 ISP C path request Paths to 5 are found and ISP C sends replies to the user with two specific contract-path-vectors. Paths to 5 are found and ISP C sends replies to the user with two specific contract-path-vectors. 5 [5, A, 1-3, 5-10Mb/s, 15-20mins, $7] [A-C, 1-3-5, 10Mb/s, 15mins]

11. Putting it together: Contract routing + Financial engineering • End-to-end QoS services • Contract Routing • Pricing • Risk management tools • Spot contracts • Forward contracts • Options on Forward • Flexibility to innovate services

12. Contingent-claim Pricing of Contracts • Outcomes of a fundamental risk • N outcomes • Market’s collective view of current worth of future outcomes • Contingent Claim pays off should a specific outcome be realized in future • fi – Price of a contingent claim, i • Current value of a pay-off obtained should outcome i be realized in future • Price of a complex payoff(V) = F . V • In continuous setting – state price density [1, 0, .., 0] [0, 1, .., 0] [f1, f2, .., fN] . . . . [0, 0, .., 1]

13. Single-domain QoS Contract Pricing and Money-back • Pricing Advertisable Contracts: with focus on • Cost recovery • Congestion sensitive • Promoting utilization • Pricing QoS Guarantees: applies financial engineering technique • Uses state-price density or contingent claims for underlying risk • Money-back Guarantees: for advertisable contract • Utilizing risk pooling concepts of insurance benefits

14. Temporal Extensions of Single-domain QoS Contracts • Bail-out Forwards: on advertisable spot contracts • between peering/edge points i and j of an ISP • with flexibility of advertising different forward prices for edge-to-edge (g2g) intra-domain paths • Forwards with provision for Bail-out conditioned on network congestion • Spot and Forwards concatenated to create long-term contracts Time

15. Spatial Composition for End-to-end QoS Contract Pricing • Macro-level Contracts: centralized concatenation of contract links • Globally optimal path between a source-destination (s-d) pair • Optimize for price given required QoS characteristics and contract duration • Micro-level Contracts: decentralized concatenation of contract links • Locally optimal short-term concatenation of contract links • Constrained to satisfy QoS requirements Micro-level Service S D Macro-level Service