On Optimal Hybrid Premium Peering and Caching Purchasing Strategy of Internet Content Providers

Increasing popularity of delay-sensitive and data-intensive online services such as video streaming has placed stronger requirements on the quality of content delivery. By negotiating premium peering agreement with an Internet service provider (ISP), a content provider (CP) is able to improve its service quality, which is beneficial for attracting end-users and increasing profits. Meanwhile, by deploying cache on its content delivery route with a proper caching mechanism, transit traffic is effectively reduced and bandwidth is saved, hence the CP can also achieve better service quality. In this paper, we study how a CP determines an optimal strategy that maximizes its utility, if both premium peering and caching are available from an ISP. We present the conditions that the CP's optimal strategy should comply with, and observe that the optimal quantity of purchasing one capacity is positively correlated to that of the other. We also find that the CP's optimal strategy indicates that the CP would purchase a moderate amount of capacity, or the maximum amount available in some case, to maximize its utility.