A pricing model for high speed networks with guaranteed quality of service

In this paper, we discuss the role of prices in combining user characterization, network resource allocation, and contract negotiation to form a complete connection establishment process. We suggest that such a process should encourage network efficiency through distributed resource allocation among virtual circuits, circuit bundles, and virtual paths. We adopt effective bandwidth as our user traffic characterization and our pricing base, and we measure network efficiency by total user benefit. We allow a limited degree of statistical multiplexing by incorporating multiplexing gain into the prices. Finally, we propose a hierarchical and distributed negotiation structure under which only hierarchically adjacent and geographically local network entities communicate with each other.