THE ROLE OF PRICE IN THE CONNECTION ESTABLISHMENT PROCESS

The evolving view of connection establishment for connection-oriented services involves two stages. The first stage consists of separate rol es for the user and the network. The user agent must characterize the information streams that will be transmitted and her valuation of the service. Similarly, the network agent must determine the network's res ources and its capabilities to accommodate various mixes of service ty pes. The second stage involves negotiations between multiple network a nd user agents, in which the parties agree to set up connections to tr ansmit the agreed information streams in a manner to guarantee the agr eed QoS, and at agreed prices. In this paper, we discuss the role of p rices in combining user characterization, network resource allocation, and contract negotiation to form a complete connection establishment process. We suggest that such a process should encourage network effic iency through distributed resource allocation among virtual circuits, circuit bundles, and virtual paths. We adopt effective bandwidth as ou r user traffic characterization and our pricing base, and we measure n etwork efficiency by total user benefit. We allow a limited degree of statistical multiplexing by incorporating multiplexing gain into the p rices. Finally, we propose a hierarchical and distributed negotiation structure under which only hierarchically adjacent and geographically local network entities communicate with each other.