Limits to Certainty in QoS Pricing and Bandwidth

This paper explores the relationship between certainty of bandwidth and certainty of pricefor Internet services over a statistically shared network. Both are important policyobjectives. Certainty of bandwidth is necessary if the Internet is to serve as a platform foradvanced communications, information and entertainment services, or even fortelephony. Certainty of price is important for universal service. More specifically, weillustrate that certainty of bandwidth and certainty of price are mutually exclusive in astatistically shared network (of which the Internet is the canonical example).Section 2 of this paper outlines the importance of certainty of price and how it might beachieved. Section 3 explains the importance of certainty in bandwidth and how differentQoS protocols impact variations in bandwidth. Here, we use standard queuing models toshow that increasing certainty in bandwidth results in decreased certainty in price.Conversely, setting a constant price with cost-based pricing in a statistically sharednetwork results in delay. This is followed by a discussion of market evidence for thisinverse relationship between certainty of price and certainty of bandwidth. Finally, wepresent conclusions and implications to be considered by policy makers.