A pricing approach for bandwidth allocation in differentiated service networks

We present a decentralized auction-based scheme for bandwidth allocation and pricing in a differentiated service-based network. Different classes of clients provide their own expected bandwidth price and required amount of bandwidth. A service provider decides the admission price and differentiated service provided for each class of clients. We introduce mathematical formulations and provide a solution approach to maximize the service provider's revenue. For a single bottleneck link case, a polynomial-time algorithm is developed to obtain an optimal solution. For a multiple bottleneck link case, a heuristic algorithm is developed to solve the problem. The effectiveness of our solution approach is validated by simulation results, which compare our algorithms against the traditional flat-rate pricing approach.