Progress on pricing with peering

This paper examines a simple model of how a provider ISP charges customer ISPs by assuming the provider ISP wants to maximize its revenue when customer ISPs have the possibility of setting up peering connections. It is shown that finding the optimal pricing is NP-complete, and APX-complete. Customers can respond to price in many ways, including throttling traffic as well as peering. An algorithm is studied which obtains a 1/4 approximation for a wide range of customer responses.