Pricing and regulating Quality of Experience

Abstract

Counteracting economic challenges in the network industry partially resulting from enormous traffic growth rates and the absence of successful Quality of Service (QoS) mechanisms in practice, we propose a novel concept centering price and quality differentiation on customers' quality perceptions, i.e., Quality of Experience (QoE). By fundamentally building on the known Paris Metro Pricing (PMP) concept we iteratively integrate pricing mechanisms with QoE aspects. Our concept also cardinally incorporates the interests of users, Internet Service Providers (ISPs) offering Internet access, and regulatory bodies-e.g., controlling the fraction of premium service class capacity. Our findings demonstrate the economic desirability for ISPs to apply price discrimination based on QoE considerations. The inclusion of QoE aspects in the traffic classification process, moreover, yields a significant increase of user utilities, while further stimulating the overall demand. This may also prepare the scene for involvements in the Net Neutrality (NN) debate.