Recently U.S. Internet service providers (ISPs) have begun charging consumers based on the amount of data they send and receive. Eventually, ISPs might offer tiered pricing that charges customers depending on the time of day they send and receive traffic (as cellular providers already do) or the physical distance a user’s data must travel. Theoretically an ISP could earn the greatest profit through a near-infinite number of tiers, but the study shows that by instituting just a few tiers—perhaps three or four—the provider could realize nearly all of those profits.

To investigate the effect of tiered pricing on ISP profitability, Associate Professor Nick Feamster and his colleagues studied how charging customers different prices depending on the distance the traffic must travel would affect an ISP’s profits. They studied pricing practices in “transit” Internet service providers—essentially high-capacity service offered by large providers, often to corporate or other large consumers (such as smaller ISPs). The research is described in a paper, “How Many Tiers? Pricing in the Internet Transit Market,” to be presented at SIGCOMM 2011, Aug. 15-19 in Toronto.

“The price of Internet transit service continues to plummet as competition among major providers becomes more fierce,” Feamster said. “As a result, providers are abandoning the ‘all you can eat’ pricing model in favor of more sophisticated pricing structures that more accurately reflect the cost of carrying that traffic. When it comes to destination-based pricing, we found that ISPs indeed can maximize profits by slicing up their service offerings into multiple tiers. Fortunately, they can achieve near-optimal profit gains with only three or four tiers.”

To arrive at this finding, the research team first developed an economic model that could predict how an ISP’s profits would be affected by varying its number of pricing tiers. In developing this model, one of the major challenges is that predicting ISP profits typically requires knowledge of costs, revenue and how customer traffic demand would vary as the ISP changed its pricing strategy. The team developed a model that can predict how profits change in response to different tiered pricing strategies—armed only with knowledge of network configurations and current customer traffic demands.

“We talked to both operators and customers to find out how transit providers are pricing bandwidth,” said Ph.D. candidate Vytautas Valancius, the research paper’s primary author. “The traffic itself was the one thing we had, but we didn’t have the ISPs’ pricing, nor did we have information about the precise cost to the ISP for carrying traffic.”

ISPs could create a different pricing tier for each traffic flow, depending on its destination, but in practical application, a large number of tiers is difficult both for the ISP to manage and for customers to understand. In fact, Valancius said, just a few tiers yield nearly all of the benefit. The researchers also confirmed that transit providers whose costs for carrying traffic vary widely (depending on where it is destined) would enjoy the greatest benefit from tiered pricing.

“One of the most interesting aspects of this work is that network operators can use this model to design pricing tiers for their own customers, using only knowledge of current traffic demands,” Feamster said. “Through our conversations with network operators, we found that many ISPs’ pricing structures are still based on rough intuition, as opposed to thorough empirical analysis. We have developed the first economic model that takes real traffic data as input to understand the impact of tiered, destination-based pricing on an ISP’s profit. ISPs can use this model to either confirm their current practices or design new pricing structures.”

The study focused on how tiered pricing can benefit ISPs, but Valancius added that a future direction for the research would be to apply the same model to study tiered pricing in consumer ISPs, delving more deeply into “user surplus”, which would capture the value consumers get from the service they are receiving, relative to the price they are paying.

For more information on this and other Georgia Tech papers at SIGCOMM 2011, visit www.gtsigcomm.com.

Cosponsored by the Georgia Research Alliance (GRA) and the Technology Association of Georgia (TAG), the competition facilitates connections between the younger entrepreneurial community and more seasoned entrepreneurs. Pindrop, founded by primary researcher and Ph.D. student Vijay Balasubramaniyan, beat out three other finalists to claim the $50,000 cash first prize, as well as more than $200,000 in donated services from the Atlanta business community.

Originally called “PinDr0p,” the technology works by analyzing audio imprints left on calls by the multiple networks—cellular, voiceover IP, public switched telephone networks—through which they travel. It uses these imprints to positively identify the calling phone with high accuracy. Equally important is that the identification is made within 15 seconds of initial call placement.

Balasubramaniyan developed Pindrop in collaboration with School of Computer Science and Georgia Tech Information Security Center (GTISC) faculty, including Assistant Professor Patrick Traynor and Professor and GTISC Director Mustaque Ahamad. Earlier this year, TAG named Pindrop Security a Georgia Top 40 Innovation Company, and it also finished second in the 2011 Startup Riot.

“Winning the prize feels great, particularly because there were 88 other great companies competing for it,” Balasubramaniyan said. “It provides great validation for the technology, the efforts of the team and the market potential. Georgia is a great place to start and build a security-focused technology company, and we’re pleased to work with the local community to support economic growth and development as we expand our reach into the financial services, government and consumer markets.”

“GTISC researchers are leaders in understanding emerging cyber security threats and in developing innovative techniques that can provide effective solutions for real-world problems,” said Ahamad. “Pindrop is just another example of this, and it will help maintain Atlanta's reputation as a security industry hub.”

Balasubramaniyan said the company’s next step will be to use its GRA/TAG competition winnings to hire staff, with plans underway for the next software release in the fourth quarter of this year. For more information, visit the Pindrop Security website or follow the company on Twitter.

The two-year unrestricted award (with a third-year option for an additional $500,000) will fund a range of activities that together are intended to make Internet access more transparent for the billions of network subscribers around the globe. At the end of the project, the team hopes to provide a suite of web-based, Internet-scale measurement tools that any user around the world could access for free. With the help of these tools, users could determine whether their ISPs are providing the kind of service customers are paying for, and whether the data they send and receive over their network connections is being tampered with by governments and/or ISPs.

“Community collaboration is a big part of this project,” said Wenke Lee, Professor in the School of Computer Science and a principal investigator on the grant. “Ultimately we hope this project will help create a ‘transparency ecosystem,’ where more and more users will take advantage of the measurement tools, which in turn will improve the accuracy and comprehensiveness of our analysis.

“For example,” Lee continued, “say something happens again like what happened in Egypt recently, when the Internet was essentially shut down. If we have a community of Internet user-participants in that country, we will know instantly when a government or ISP starts to block traffic, tamper with search results, even alter web-based information in order to spread propaganda.”

Lee’s fellow PI on the award is Nick Feamster, Assistant Professor in the School of Computer Science. The two are joined by co-PIs Mustaque Ahamad, Professor in the School of Computer Science and Director of the Georgia Tech Information Security Center; Patrick Traynor, Assistant Professor in the School of Computer Science; and Henry Owen, Professor in the School of Electrical & Computer Engineering.

The project, funded under Google’s 2-year-old Focused Research program, will analyze Internet access along three main properties: reachability from a variety of access networks; performance of user networks, particularly in comparison to the performance promises made by Internet service providers (ISPs); and integrity of information moving through these networks.

According to Feamster, some 60 nations (including the United States) censor some access to information on the Internet. Moreover, the total number of worldwide users (currently estimated at 1.9 billion) is expected to double within the next decade. Finally, at least 4.5 billion people subscribe to cellular networks, accessing through their mobile devices everything from online banking services to streaming music and video. Both “traditional” Internet connections and cellular-based networks will be covered by the tools the researchers hope to create.

“Regardless of what policies an ISP or government takes on issues like censorship and net neutrality, we believe those policies should be transparent,” Feamster said. “In addition to new network measurement and security monitoring algorithms, we want to create and deploy a ‘transparency watchdog’ system that uses monitoring agents to keep constant tabs of network performance and availability in strategic Internet locations around the world.”

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About the Georgia Tech College of Computing

The Georgia Tech College of Computing is a national leader in the creation of real-world computing breakthroughs that drive social and scientific progress. With its graduate program ranked 10th nationally by U.S. News and World Report, the College’s unconventional approach to education is defining the new face of computing by expanding the horizons of traditional computer science students through interdisciplinary collaboration and a focus on human centered solutions. For more information about the Georgia Tech College of Computing, its academic divisions and research centers, please visit http://www.cc.gatech.edu.

Contact

Brendan Streich

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The award ceremony will coincide with a presentation by Crippen,a four flight veteran, who has logged more than 565 hours in space, orbited theearth 374 times and traveled more than 9.4 million miles. The lecture is freeand open to the public.

“It is my honor to be presenting Joy with the AstronautScholarship Foundation Award,” said Crippen, “Joy is a bright, up-and-comingforerunner in the field of computer science and she will be one of the manyleaders who will keep the United States at the leading edge of breakthroughtechnology.”

Buolamwini is majoring in computer science and holds a 4.0GPA. She has worked on a data tracking system for Google-sponsored research andis interested in developing affordable mobile technology to propel economicdevelopment in West African nations. Buolamwini is also interested in healthcare applications of computer technology. She plans to earn a Ph.D. in computerscience and pursue “research with an entrepreneurial spirit.”

The Astronaut Scholarship is the largest monetary awardgiven in the United States to science and engineering undergraduate studentsbased solely on merit. Twenty of these prestigious awards were dispersed thisyear through ASF to outstanding college students majoring in science,engineering or math. More than $3 million in scholarships have been awarded todate with $204,000 to Georgia Tech students alone. These well-rounded studentsexhibit motivation, imagination and intellectual daring, as well as exceptionalperformance, both in and out of the classroom.

Crippen was selectedas a NASA Astronaut in September 1969. After serving as a member of the Astronautsupport crew for Skylab 2,3 and 4, he was named Pilot for the first Shuttle Columbia, STS-1, and served as thespacecraft commander for STS-7, STS-41C and STS-41G. STS-1 was the firstspacecraft to launch with wings using solid rocket boosters, as well as the firstwinged reentry vehicle to return to a conventional runway landing. Crippen, a retired Navy captain, later served asdirector, NSTS Operations, at NASA's Kennedy Space Center, and as KSC directorfrom 1992 to January 1995. He then served as president of Thiokol AerospaceGroup in Utah and now resides in Florida. Crippen serves on the Board ofDirectors for the Astronaut Scholarship Foundation and was inducted into theU.S. Astronaut Hall of Fame on November 10, 2001.

The Astronaut Scholarship Foundation is a non-profitorganization established by the Mercury Astronauts in 1984. Its goal is to aidthe United States in retaining its world leadership in science and technologyby providing scholarships for exceptional college students pursuing degrees inthese fields. Today, more than 80 Astronauts from the Gemini, Apollo, Skylab,Space Shuttle and Space Station programs have joined in this educationalendeavor.  For more information,call 321-455-7015 or log on to www.AstronautScholarship.org.

"Howard is one of the world's leading authorities on computersecurity, with some 40 years of experience in government, business and lawenforcement,"said John Brennan, assistant to the president for HomelandSecurity and Counterterrorism, in an e-mail announcing the appointment lastmonth. "Howard will have regular access to the president and serve as a keymember of his National Security Staff.  He will also work closely with hiseconomic team to ensure that our cybersecurity efforts keep the nation secureand prosperous."

AtTech, Schmidt has helped set up the GTISC industry advisory board. He has worked ona research project to evaluate the cyber security policies of various UnitedStates stakeholders. He has also given lectures on security policies andstrategies.

Schmidtpreviously served as former chief security strategist for the US CERT Partners Programand former special advisor to the White House for Cyberspace Security underPresident George W. Bush. He joined Tech in 2006 to work with GTISC to improve the state ofinformation security by lending his vast knowledge and expertise in thisgrowing technological area.

 Schmidt'sdistinguished career as an information security advocate includes leadershippositions with both public and private sector organizations. He has served onthe President's Critical Infrastructure Protection Board, was an augmentedmember of the President's Committee of Advisors on Science and Technology andheld executive positions with the Information Systems Security Association, theInformation Technology Information Sharing and Analysis Center, the NationalInstitute of Standards and Technology and the Information Security PrivacyAdvisory Board. Schmidt also served as vice president and chief securitystrategist for eBay and chief security officer for Microsoft Corporation,forming and directing the computer giant's Trustworthy Computer SecurityStrategies Group.