Skip to main content
Disciplines
Automotive Business IT + Informatics Construction + Real Estate Electrical Engineering + Electronics Energy + Sustainability Insurance + Risk Finance + Banking Management + Leadership Marketing + Sales Mechanical Engineering + Materials
Events
DE
EN
Books
Journals
Topic Page
Marketing
Start single access now
Access for companies
EXTENDED SEARCH
Log in
Top

2020 | Book

Characteristics and Characterization of Information Networks Read chapter Read first chapter

The Economics of Telecommunication Services

An Engineering Perspective

Authors: Dr. Pramode Verma, Fan Zhang

Publisher: Springer International Publishing

Book Series : Textbooks in Telecommunication Engineering

Part of: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

Login to get access
insite
SEARCH

About this book

This textbook characterizes the economics of telecommunication services from an engineering perspective. The authors bring out the fundamental drivers of the industry and characterize networks from a graph theoretic perspective, including random, small world, and scale free networks. The authors relate the topology of a telecommunication network using circuit and packet switched architectures to throughput and other performance parameters. The pricing model proposed in this book is based on the cost of displaced opportunity as opposed to the cost of the elements of the network engaged in delivering a service. The displaced opportunity is characterized by the revenue associated with the service that the network could have alternatively delivered most efficiently using an identical level of resources. The book addresses other topics such as regulation in legacy networks, and net neutrality. Finally, the book introduces the application of game theory in a multi-vendor, multi-services competitive marketplace. The book aims to bridge the gap between the science of economics as practiced by economists and practice of pricing from a telecommunication engineer’s perspective. This book is suitable for use by senior undergraduate or graduate students of telecommunication engineering or researchers and practitioners in telecommunication engineering.

Table of Contents

Frontmatter
Chapter 1. Characteristics and Characterization of Information Networks
Abstract
This chapter presents the characteristics and characterization of information networks. It presents the modalities of information and the distinction between analog and digital information. It relates the size of a network to its economics. Specifically, it establishes the concept of externality. Externality simply means that a network is more valuable if there are more users connected to it since it increases the access space for each user. The impact of mergers of homogeneous networks is quantitatively discussed.
Pramode Verma, Fan Zhang
Chapter 2. Drivers of the Telecommunication Industry
Abstract
Chapter 1 was devoted to understanding the impact of externality on telecommunication networks. In addition to externality, the fast evolving technology underlying the telecommunication space continues to shape telecommunication networking in fundamental ways at an incredible pace. This chapter focuses on the factors that set the telecommunications industry apart from other industries. We present technology as a prime driver of the telecommunications industry. Our rationale is based on the fact that reducing costs of telecommunication technology while enhancing its functionality and performance will continue to expand the breadth and depth of telecommunication applications. Furthermore, telecommunication network-based services can displace other commodities and services enhancing demand for such services and applications on a continuing basis in the foreseeable future.
Telecommunication business constitutes about 15% of the gross domestic product (GDP) of the USA. At an estimated 18.494 trillion dollars of GDP in 2016, the telecommunication business is worth 2.77 trillion dollars in the USA. There are two raw materials that constitute the underlying technology of telecommunication networks: Bandwidth and Processing speed. In Sects. 2.1 and 2.2, we discuss the cost trends of these two technologies. Section 2.4 considers the utility of telecommunication services from an economic standpoint. Sections 2.5 and 2.6 consider the demand and cross elasticity of telecommunication services, respectively. Section 2.8 summarizes this chapter.
Pramode Verma, Fan Zhang
Chapter 3. Graph Theoretic Characterization of Communication Networks
Abstract
This chapter characterizes communication networks from a graph theoretic perspective. A graph theoretic perspective highlights the structural properties of networks. An analysis of the network graph can quantify the relationship between network topology and expected performance of the network under a variety of scenarios. This chapter addresses several legacy network topologies and introduces random networks.
Pramode Verma, Fan Zhang
Chapter 4. Small World and Scale-Free Networks
Abstract
Chapter 3 has addressed a class of Networks known as random networks. Random networks are part of Complex Networks. Although random networks are not necessarily real networks, they provide a model which can be analyzed to predict its behavior under a variety of conditions using established results in probability theory. Random networks also provide a baseline against which other network models can be compared and scaled. This chapter discusses two other classes of complex networks: small world networks and scale-free networks.
Pramode Verma, Fan Zhang
Chapter 5. Characterization of Telecommunication Traffic
Abstract
Telecommunication networks carry traffic between and among sources and destinations. The performance perceived by a user is an important factor in the design of and marketing the services offered by a network. User perceived performance is driven by three major factors: Architecture of the network, resources provided in the network, and characteristics of the traffic the network carries. For a given network, traffic has an important bearing on the performance perceived by the user. Correspondingly, the architecture of the network is driven by the volume and characteristics of traffic it is expected to carry. This chapter discusses the parameters in terms of which the user perceives the performance of the network and presents the parameters which characterize the traffic.
Pramode Verma, Fan Zhang
Chapter 6. Bandwidth and Throughput of Networks: Circuit Switched Networks
Abstract
Telecommunication customers pay for the transportation of traffic from a source to the intended destination. This chapter focuses on developing a relationship between the traffic presented to the network and its ability to deliver it within the limited resources the network has. The architecture of the network considered is based on circuit switching. The chapter, in particular, addresses the impact on throughput as a function of increasing traffic.
Pramode Verma, Fan Zhang
Chapter 7. Bandwidth and Throughput of Networks: Packet Switched Networks
Abstract
Chapter 6 has addressed the throughput of circuit switched networks. We consider packet switched networks in this chapter and determine the impact of network topology on throughput. The introduction of a new element—delay—in packet switched networks introduces some interesting opportunities and challenges in defining throughput that the customer would be willing to pay for. This is the subject of discussion in this chapter.
Pramode Verma, Fan Zhang
Chapter 8. Pricing of Telecommunication Services
Abstract
Chapters 6 and 7 have presented the impact of multi-hop traffic on throughput in a network of arbitrary topology. This chapter presents general considerations for pricing telecommunication network services. Pricing consideration based on throughput or delay is considered in Chaps. 9 and 10.
Pramode Verma, Fan Zhang
Chapter 9. Pricing of Circuit Switched Services
Abstract
Chapter 6 has considered the reduction in throughput for circuit switched multi-hop networks. If we were to have the quality of service measured as probability of blocking in a multi-hop network bounded to a certain value, we must have more bandwidth in each segment of the end-to-end transmission facility when compared with a single-hop network. In this chapter, we consider the additional amount of resources needed for multi-hop networks if the quality of service were to remain identical to that of a single-hop network with identical traffic intensity.
Pramode Verma, Fan Zhang
Chapter 10. Pricing of Packet Switched Services
Abstract
Chapter 7 has discussed the impact of bandwidth on throughput in packet switched networks as a function of incident traffic. Chapter 9 has followed up and developed a pricing scheme for circuit switched networks. The pricing scheme in Chap. 9 was based on cost of lost opportunity rather than the consumption of resources. This chapter proposes a similar approach to pricing packet switched network services. We first compute the resource requirement which is consistent with the quality of service required for the given volume of traffic for a specific network. Once the resource requirement is known, pricing is determined based on what level of revenue that resource would have generated if it were deployed in the most efficient manner.
Pramode Verma, Fan Zhang
Chapter 11. Regulation
Abstract
This chapter introduces legacy mechanisms that were deployed to regulate public switched telecommunication networks, especially for monopoly environments. A constant revenue model for a circuit switched network is also discussed in this chapter.
Pramode Verma, Fan Zhang
Chapter 12. Net Neutrality
Abstract
Net neutrality has been the subject of much debate and discussion in recent years. It has been driven by a set of regulatory policies adopted in the last twenty-five years, freeing service providers and content owners from the rigid separation of their functions into restricted domains. The term net neutrality applies to service or broadband access providers requiring that they treat all traffic equally without regard to origin or destination and its characteristics. This chapter discusses the market participants in the net neutrality debate and the impact of imposing strict neutrality or offering some degree of flexibility to the service provider or the provider of broadband access.
Pramode Verma, Fan Zhang
Chapter 13. Game Theory and Its Applications to Communication Networks
Abstract
Game theory has been used for years as an economic analysis tool to understand and predict what will happen in economic contexts. Because of the interdependence among users of communication networks, game theory also provides a useful framework for modeling users’ decisions. In this chapter we discuss some of the game theoretic terminology and basic concepts that are relevant to the present work and review some of their applications to communication networks.
Pramode Verma, Fan Zhang
Chapter 14. Multi-Service Network Models
Abstract
This book has been primarily motivated by the advent of networks that support more than one class of service. The need for a mechanism that makes profitable and efficient use of existing resources leads to the importance of a reasonable pricing policy to be adopted by service providers. This chapter develops a pricing model for a network that offers a multiplicity of services.
Pramode Verma, Fan Zhang
Chapter 15. Subsidy-Free Prices in Priority-Based Networks
Abstract
Some of the simplest types of multi-service networks are those in which the distinction among service classes is accomplished exclusively through the assignment of different service priorities on a per-packet basis. In this chapter, we study the desirable subsidy-free price of each class of service on such priority-based networks taking into account the fairness among classes and economic efficiency requirements (minimizing the waiting cost associated with all classes of service).
Pramode Verma, Fan Zhang
Chapter 16. A Constant Revenue Model for Net Neutrality
Abstract
Net neutrality has been discussed in Chap. 12. This chapter describes an alternative that can realize the objectives of net neutrality by keeping the revenue of the service provider constant. This chapter offers a mechanism based on inter-user compensation whereby heavy users compensate light users using a game theoretic approach such that the revenue of the service provider during busy periods does not exceed a predetermined level.
Pramode Verma, Fan Zhang
Chapter 17. A Two-step Quality of Service Provisioning in Multi-Class Networks
Abstract
In this chapter, we investigate resource allocation issues in a multi-class DiffServ network. The scalability and efficient network resource consumption of class-based networks compared to flow based network architectures like IntServ have been clearly established. In a class-based network, IP flows are classified and aggregated into different forwarding classes which provide differentiated services according to the Service-Level-Agreements (SLAs) between the network provider and the end user class.
Pramode Verma, Fan Zhang
Chapter 18. Network of the Future
Abstract
Networks are living entities. They offer services that are constantly evolving; the traffic they serve changes from instant to instant. This chapter looks at the likely structure of future networks and the services they have the potential to offer.
Pramode Verma, Fan Zhang
Backmatter
Metadata
Title
The Economics of Telecommunication Services
Authors
Dr. Pramode Verma
Fan Zhang
Copyright Year
2020
Electronic ISBN
978-3-030-33865-7
Print ISBN
978-3-030-33864-0
DOI
https://doi.org/10.1007/978-3-030-33865-7