Market Enabling Network Architecture NSF FIND PI Meeting Arlington, VA June 27, 2007

1. Market Enabling Network ArchitectureNSF FIND PI MeetingArlington, VAJune 27, 2007 John Musacchio Assistant Professor Technology and Information Management University of California, Santa Cruz johnm@soe.ucsc.edu Jean Walrand, Venkat Ananthram, Galina Schwartz EECS University of California, Berkeley Shyam Parekh Alcatel-Lucent

2. Shortcomings • Inconsistent Service Quality • Security John Musacchio

3. Missing Markets ISP User with high willingness to pay For high rate, real time service. Zzzz Negative externality John Musacchio

4. Approach • Ideal architecture: • Enable Markets • Service choice • Security • Flexible to allow innovation at the application layer • “Lightweight” – strongpoint of current Internet • Questions • What should be in the architecture? • What should not be in the architecture? John Musacchio

5. Service Choice • Users offered real-time choice: “red” and “blue” • “Red” and “blue” not specified to users in detail • ISP incentivized to improve along dimensions that matter • Unlike ATM, IntServ, DiffServ, service definitions not standardized John Musacchio

6. Service Choice: Issues • Coordination of service definitions • Getting ISPs to invest • No one wants to be first mover [1] • Quantifying value of differentiation [2] • Oligopoly pricing  efficiency loss • Social welfare less than if social planner set prices • Studying effects of service choice on efficiency loss [3] John Musacchio

7. Should A have to pay ISP 2? Net Neutrality: Issues $ ??? $ $ ISP 1 ISP 2 A B $ Content providers pay their ISP • Would allowing 2 to charge A • encourage 2 to invest? • discourage A to invest? • What revenue sharing mechanisms should new Internet have? • Ongoing work: game model [4] John Musacchio

8. Internet Today – Security Inadequacy ANALOGY • Users do not bear full cost of poor computer maintenance • Drivers do not bear full cost of reckless driving. • Liability insurance incentivizes drivers to be careful. Zzzz John Musacchio

9. $ Zzzz Markets for Security • Example: • Users pay to be certified by a Certification Agency (CA) • CA takes on liability for attacks traced back to user • CA incentivized to encourage users to take due care OS Update Antivirus Update John Musacchio

10. Markets for Security • Possible incentives for users to go to CA • Network drops discards uncertified packets in crisis. • Adverse selection a problem • Make insurance mandatory? • Architectural Requirements: • Improve traceability of attacks • Mechanism for dropping uncertified packets John Musacchio

11. Conclusions • Internet is both • an engineered system • an economic system • We must consider engineering and economic issues jointly John Musacchio

12. References + Work in Progress [1] J. Musacchio, S. Wu, “A Game Theoretic Model for Network Upgrade Decisions,” Allerton Conference 2006. [2] S. Ayani, J. Walrand, “Increasing Wireless Revenues with Service Differentiation,” in submission. [3] J. Musacchio, S. Wu, “ The Price of Anarchy in a Network Pricing Game,” in submission. [4] J. Musacchio, J. Walrand, “Economic Consequences of Weak Network Neutrality,” to appear at Asilomar 2007. [5] P. Honeyman, G. Schwartz, “Interdependence of Reliability and Security,” Workshop on Economics of Information Security, CMU, June 2007.