principles of network and system administration phần 6 potx

[...]... periodically on and off, and has on and off phases of long duration As we have seen in Example 4.5, this type of traffic has an effective bandwidth given by Þon-off s; t/ D h m sth 1 s log 1 C st h Ái 1 (8.12) Here, s and t are defined by the operating point of the multiplexer Think of Þon-off as a function of m, where without confusion we can write it as Þon-off m/, a concave function of m Note that the network. .. personnel, depreciation ]of network elements, cost of capital, depreciation of buildings and vehicles, marketing cost, overhead, power consumption, and the cost of renting raw bandwidth Depreciation is the yearly estimate of the cost of asset usage and corresponds to the decrease of asset value 1 1 2 3 Services Network elements 2 1 1 2 3 4 Activities 2 5 6 Input factors Figure 7.4 The cost of input factors... level and serves customers on the same street) It also uses the cable (or fibre) that connects the concentrator to the switch at the premises of the network provider Hence, the network element related cost of the service to the customer includes the cost of the copper wires (which are not used by others), and of part of the cost of the concentrator, the cable and the input port of the switch, and the... context, prices of contracts should be proportional to effective bandwidths Let us discretize the size of the possible contracts and enumerate them so that qi is the size of a contract of type i, i D 1; : : : ; k Now the technology set of P the network is i x i qi Ä Q, where x i is the number of contracts of type i Hence the effective bandwidth is Þi D qi , and the optimal prices are of the form pi... consumed by the network operator, such as labour and depreciation of network elements The next level consists of labour-intensive activities that are required for the network to operate and produce services The next level consists of the network elements such as the routers, switches and links The last level consists of services Input cost factors are allocated to network elements and activities Activities... 7 .6 Further reading The book of Mitchell and Vogelsang (1991) contains comprehensive treatment of theoretical aspects of cost-based pricing The net incremental revenue test is due to Baumol (19 86) Activity based costing is discussed in the book of Hilton, Maher and Selto (2003) A thorough discussion of the merits of LRIC for pricing access network services is in Economides (2000) For definitions of. .. make use of this type of pricing Section 8.5 presents a simple example to illustrate the long-term interaction between tariffing and the load on the network 8.1 Pricing and effective bandwidths A simple example will illuminate the relationship between the prices for services and their effective bandwidths Suppose a network operator offers two contract types to his customers PRICING AND EFFECTIVE BANDWIDTHS... operating point are completely determined by the degree of competition and the price elasticity of demand, as summarized by  and ž (recalling that ž, the price elasticity of demand, is a function of p) In other words, the revenue maximizing price of the service does not depend on the amount of resources it consumes in the network, but only on its demand The marketing department should construct the tariff... consumption, space rent, etc.), and the activities that are concerned with the operation and management of the network element These include input factors and activities that have a broader scope and are of the common cost type, such as general expenses and company management cost The cost of these must be apportioned in an ad hoc way An example is the salaries of the members of the board of the company This overhead... charge per unit of time of a unit of effective bandwidth along route r This again suggests that optimal prices should be proportional to effective bandwidths The price for a contract over route r is equal to the product of the effective bandwidth of the contract and the price of a unit of effective capacity along route r Such prices can be computed by a tatonnement Each link of the network posts its price