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The Economics of Transit and Peering Interconnections in the Internet

Amogh Dhamdhere ( CAIDA/UCSD ) amogh@caida.org With Constantine Dovrolis (Georgia Tech) Pierre Francois (Univ. catholique de Louvain) Kc Claffy (CAIDA). The Economics of Transit and Peering Interconnections in the Internet. Outline. Motivation

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The Economics of Transit and Peering Interconnections in the Internet

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  1. AmoghDhamdhere (CAIDA/UCSD) amogh@caida.org With Constantine Dovrolis (Georgia Tech) Pierre Francois (Univ. catholique de Louvain) KcClaffy (CAIDA) The Economics of Transit and Peering Interconnections in the Internet

  2. Outline • Motivation • ITER: A computational model of interdomain interconnection • Modeling the transition from the “old” to the “new” Internet • Modeling complex interdomain relationships: value-based peering • Ongoing Work [CoNEXT 2010, to appear] [ITC 2010, NANOG 49] [NSF NETSE grant, 2010-2013] The Economics of Transit and Peering Interconnections

  3. The Internet Ecosystem • >30,000 autonomous networks independently operated and managed • The “Internet Ecosystem” • Different types of networks • Interact with each other and with “environment” • Network interactions • Localized, in the form of bilateral contracts • Competitive (customer-provider), symbiotic (peering) • Distributed optimizations by each network The Economics of Transit and Peering Interconnections

  4. High Level Questions • How does the Internet ecosystem evolve? • What is the Internet heading towards? • Topology • Economics • Performance • Which interconnection strategies of networks optimize their profits, costs and performance? • How do these strategies affect the global Internet? The Economics of Transit and Peering Interconnections

  5. Economics of the Internet Ecosystem Source: William Norton Source: Cisco Source: Arbor Networks Source: IAB The Economics of Transit and Peering Interconnections

  6. Economics of the Internet Ecosystem How do we make sense of all this? The Economics of Transit and Peering Interconnections

  7. Economically-principled models • Objective: understand the structure and dynamics of the Internet ecosystem from an economic perspective • Capture interactions between network business relations, internetwork topology, routing policies, and resulting interdomain traffic flow • Create a scientific basis for modeling Internet interconnection and dynamics based on empirical data The Economics of Transit and Peering Interconnections

  8. Previous Work • “Descriptive” • Match graph properties e.g. degree distribution • Homogeneity • Nodes and links all the same • Game theoretic, analytical • Restrictive assumptions • Little relation to real-world data • “Bottom-up” • Model the actions of individual networks • Heterogeneity • Networks with different incentives, link types • Computational • As much realism as possible • Parameterize/validate using real data The Economics of Transit and Peering Interconnections

  9. Outline • Motivation • ITER: A computational model of interdomain interconnection • Modeling the transition from the “old” to the “new” Internet • Modeling complex interdomain relationships: value-based peering • Ongoing Work The Economics of Transit and Peering Interconnections

  10. The ITER Model • Agent-based computational model to answer “what-if” questions about Internet evolution • Inputs: According to the best available data… • Network types based on business function • Peer/provider selection methods • Geographical constraints • Pricing/cost parameters • Interdomain traffic matrix • Output: Equilibrium internetwork topology, traffic flow, per-network fitness The Economics of Transit and Peering Interconnections

  11. The ITER approach Routing Cost/price parameters Interdomain TM Interdomain topology Traffic flow Per-AS fitness Provider selection • Compute equilibrium: no network has the incentive to change its providers/peers • Measure topological and economic properties of equilibrium e.g., path lengths, which providers are profitable, who peers with whom Peer selection The Economics of Transit and Peering Interconnections

  12. Why Study Equilibria? • The Internet is never at equilibrium, right? • Networks come and go, traffic patterns change, pricing/cost structures change, etc…. • Studying equilibria tells us what’s the best that networks could do under certain traffic/economic conditions, and what that means for the Internet as a whole • If those conditions change, we need to re-compute equilibria The Economics of Transit and Peering Interconnections

  13. ITER: Network Types • Enterprise Customers (EC) • Stub networks at the edge, e.g. Georgia Tech • Transit Providers • Provide Internet transit • Regional in scope (STP), e.g. Comcast • “Tier-1” or global (LTP), e.g., AT&T • Content Providers (CP) • Major sources of content, e.g. Google The Economics of Transit and Peering Interconnections

  14. ITER: Provider and Peer Selection • Provider selection • Choose providers based on customer cone size • Good measure of the “size” of a provider • Used by commercial products, e.g., Renesys • Peer selection strategies • Peer based on total traffic handled • Approximates the “equality” of two ISPs The Economics of Transit and Peering Interconnections

  15. ITER: Economics, Routing and Traffic Matrix • Realistic transit, peering and operational costs • Transit prices based on data from NANOG • BGP-like routing policies • No-valley, prefer customer, prefer peer routing policy • Traffic matrix • Heavy-tailed content popularity and consumption by sinks • client-server traffic: from CPs to ECs • peer-to-peer traffic: between ECs The Economics of Transit and Peering Interconnections

  16. Computing Equilibrium • Situation where no network has the incentive to change its connectivity • Too complex to find analytically: Solve computationally • Computation • Proceeds iteratively, networks “play” in sequence • Compute routing, traffic flow, AS fitness • Repeat until no player has incentive to move The Economics of Transit and Peering Interconnections

  17. Properties of the equilibrium • Is equilibrium always reached? • Yes, in most cases • Is the equilibrium unique? • No, can depend on playing sequence • Multiple runs with different playing sequence • Per-network properties vary widely across runs • Macroscopic properties show low variability The Economics of Transit and Peering Interconnections

  18. Outline • Motivation • ITER: A computational model of interdomain interconnection • Modeling the transition from the “old” to the “new” Internet • Modeling complex interdomain relationships: value-based peering • Ongoing Work [CoNEXT 2010, to appear] The Economics of Transit and Peering Interconnections

  19. Recent Trends: Arbor Networks Study • The Old Internet (late 90s – 2007) • Content providers generated small fraction of total traffic • Content providers were mostly local • Peering was restrictive “Internet Interdomain Traffic”, Labovitz et al., Sigcomm 2010 The New Internet (2007 onwards) Content providers generate large fraction of total traffic Content providers are present everywhere Peering is more open The Economics of Transit and Peering Interconnections

  20. Plugging into ITER • Simulate two instances of ITER: “Old” and “New” Internet • Change three parameters • Fraction of traffic sourced by CPs • Geographical spread of CPs • Peering openness • Compute equilibria for these two instances • Compare topological, economic properties The Economics of Transit and Peering Interconnections

  21. ITER Sims: End-to-end Paths • End-to-end paths weighted by traffic are shorter in the “new Internet” The Economics of Transit and Peering Interconnections

  22. ITER Sims: Traffic Transiting Transit Providers • Traffic bypasses transit providers • More traffic flows directly on peering links • Implication: Transit providers lose money! • Content providers get richer The Economics of Transit and Peering Interconnections

  23. ITER Sims: Peering in the New Internet • Transit providers need to peer strategically in the “new” Internet • Peering with large Content Providers benefits transit providers in the new Internet • Try to attract traffic by peering with CPs The Economics of Transit and Peering Interconnections

  24. Outline • Motivation • ITER: A computational model of interdomain interconnection • Modeling the transition from the “old” to the “new” Internet • Modeling complex interdomain relationships: value-based peering • Ongoing Work [ITC 2010, NANOG 49] The Economics of Transit and Peering Interconnections

  25. Complex Interdomain Relationships • So far, we considered customer-provider and settlement-free peering links • Customer-provider: customer pays provider • Settlement-free peering: No payments • A whole spectrum of relationships somewhere in between – paid peering • “To peer or not to peer?”  “To peer or not to peer, at what price?” The Economics of Transit and Peering Interconnections

  26. To Peer or Not to Peer, at What Price? • B A ??? Should it be settlement-free or paid-peering? Should I peer with B? make What price would B be willing to offer (or accept) ? The Economics of Transit and Peering Interconnections

  27. Value Based Peering • Price based on the “value” of the link • For a network, define the notion of “fitness” • f = revenue – interconnect costs – backhaul cost • Value of the link is the difference in fitness with and without the link • V = fwith - fwithout • Revenue and costs could change on peering/depeering The Economics of Transit and Peering Interconnections

  28. What Affects Peering Value? T • Interconnect cost changes: Avoid a transit provider • Backhaul cost changes: Peering link changes how traffic is routed in a network • Revenue changes: Attract/lose traffic due to new peering link $$$ $$$ A • B $$$ The Economics of Transit and Peering Interconnections

  29. The Fair Peering Price • An oracle knows VA and VB • Oracle must decide the price for peering • Fair price is (VA-VB)/2 VA VB A • B (VA-VB)/2 The fair price equalizes the benefit that A and B see from the link The Economics of Transit and Peering Interconnections

  30. Why Peer at the Fair Price? • Peering with the fair price is optimal • Both networks see better fitness by peering at the fair price • Peering with the fair price is stable • No network has the incentive to unilaterally depeer the other network • Unique Nash Equilibrium • Optimal and stable as long as VA+VB > 0 • Either VA or VB can be negative, as long as total is positive • For cost-benefit peering, both VA and VB must be positive The Economics of Transit and Peering Interconnections

  31. Some Hard Questions.. • Value-based peering is fair, optimal and stable. But is there an incentive to be fair?  • How do networks estimate peering value? • What if networks lie about peering value? • What happens if everyone uses value-based peering? The Economics of Transit and Peering Interconnections

  32. ITER Results: Value-based Peering • Higher density of peering links with value-based peering  Shorter end-to-end paths • Links that are not allowed with traffic-ratio or cost-benefit peering are possible with value-based peering • Payment direction: Content providers end up paying large transit providers, get paid by smaller transit providers • This could be happening already! The Economics of Transit and Peering Interconnections

  33. Outline • Motivation • ITER: A computational model of interdomain interconnection • Modeling the transition from the “old” to the “new” Internet • Modeling complex interdomain relationships: value-based peering • Ongoing Work [NSF NETSE grant, Aug 2010-2013] The Economics of Transit and Peering Interconnections

  34. Ongoing Work • Strategy selection by ISPs • Model how networks dynamically change their provider/peer selection strategies • What is the best possible strategy for different network types? • Managing the cost of network traffic • Model traffic related-costs for ISPs • Support peering decisions, capacity upgrades, differential pricing models [A. Lodhi, A. Dhamdhere, C. Dovrolis] [M. Motiwala, A. Dhamdhere, N. Feamster, A. Lakhina] The Economics of Transit and Peering Interconnections

  35. Avoiding “garbage-in, garbage-out” • Models are only as good as the data you provide as input • How do we get the best possible data to parameterize ITER-like models? • What data do we need? • Interdomain traffic patterns • Peering policies • Geographical presence of networks • Cost/pricing structures The Economics of Transit and Peering Interconnections

  36. Measuring Interdomain Traffic • We don’t really know how much traffic each pair of networks exchanges! • Measure qualitative properties of the interdomain TM from different vantage points B A Internet GT Netflow The Economics of Transit and Peering Interconnections

  37. Measuring Interdomain Traffic • We don’t really know how much traffic each pair of networks exchanges! • Measure qualitative properties of the interdomain TM from different vantage points B ISP Netflow C A The Economics of Transit and Peering Interconnections

  38. Measuring Interdomain Traffic • We need data from as many vantage points as possible! • Currently working with GEANT, SWITCH, Georgia Tech • Let us know if you can help! B ISP Netflow C A The Economics of Transit and Peering Interconnections

  39. Summary • We need realistic, economically-principled models to make sense of the Internet ecosystem • We developed ITER, a computational model of interdomain interconnection • We are working on better parameterization and validation using real-world measurements • We need your help and feedback! The Economics of Transit and Peering Interconnections

  40. Thanks!amogh@caida.orgwww.caida.org/~amogh The Economics of Transit and Peering Interconnections

  41. References • “The Internet is Flat: Modeling the Transition from a Transit Hierarchy to a Peering Mesh” • A. Dhamdhere, C. Dovrolis [CoNEXT 2010] • “A Value-based Framework for Internet Peering Agreements” • A. Dhamdhere, C. Dovrolis, P. Francois [ITC 2010] • “The Economics of Transit and Peering Interconnections in the Internet” • C. Dovrolis, K. Claffy, A. Dhamdhere [NSF NETSE 2010-2013] The Economics of Transit and Peering Interconnections

  42. Backup slides The Economics of Transit and Peering Interconnections

  43. Network actions • Networks perform their actions sequentially • Can observe the actions of previous networks • And the effects of those actions on traffic flow and economics • Network actions in each move • Pick set of preferred providers • Evaluate each existing peering link • Try to create new peering links The Economics of Transit and Peering Interconnections

  44. Three Factors • Fraction of traffic sourced by CPs • Geographical presence of CPs • Peering openness • All three factors need to change to see the differences between the “old” and “new” Internet The Economics of Transit and Peering Interconnections

  45. Peering Requirements • Laundry list of conditions that networks specify as requirements for (settlement-free) peering • Traffic ratios, minimum traffic, backbone capacity, geographical spread … • Heuristics to find networks for which it makes sense to exchange traffic for “free” • But when it comes to paid peering.. • What is the right price? Who should pay whom? • Are these heuristics always applicable? • Mutually beneficial peering links may not be formed The Economics of Transit and Peering Interconnections

  46. Peering Uncertainty – Current Peers • B A Does B benefit more than me? make Should I demand payment? Should I depeer? Why is B still a settlement-free peer? The Economics of Transit and Peering Interconnections

  47. Negative Peering Value $102.5k  $52.5k  fA: $50k $60k fB: $100k $95k A • B $7.5k VB=-$5k VA=$10k The Economics of Transit and Peering Interconnections

  48. Modeling the Internet Ecosystem • Networks select providers and peers to optimize an objective function • E.g., Profit, performance… • What are the effects of provider and peer selection strategies on the involved networks? • What are the global, long-term effects of these strategies on the whole Internet? • Topology, traffic flow, economics, performance (path lengths) • E.g., Can we predict what would happen if (fair) paid-peering becomes the common case? The Economics of Transit and Peering Interconnections

  49. Measuring Peering Value • How do A and B measure VA and VB? • With Peering trials: • Collect: netflow, routing data • Know: topology, costs, transit providers • With peering trials, A and B can measure their own value for the peering link (VA andVB) reasonably well • Hard for A to accurately measure VB (and vice versa) The Economics of Transit and Peering Interconnections

  50. Hiding peering value • Assume true VA+ VB> 0 and VB> VA • A should get paid (VB - VA )/2 • If A estimates VB correctly, and claims its peering value is VL, where VL << VA • B is willing to pay more: (VB - VL )/2  • If A doesn’t estimate VB correctly, and VL+ VB < 0, the peering link is not feasible! • A loses out on any payment  • Does the risk of losing out on payment create an incentive to disclose the true peering value? The Economics of Transit and Peering Interconnections

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