As the computer, communication, and entertainment industries begin to
integrate phone, cable, and video services and to invest in new techno
logies such as fiber-optic cables, interruptions in service can cause
considerable customer dissatisfaction and even be catastrophic. In thi
s environment, network providers want to offer high levels of service-
in both serviceability (e.g., high bandwidth) and survivability (failu
re protection)-and to segment their markets, providing better technolo
gy and more robust configurations to certain key customers. We study c
ore models with three types of customers (primary, primary but critica
l, and secondary) and two types of services/technologies (primary and
secondary). The network must connect all primary customers using prima
ry (high bandwidth) services and, additionally, contain a back-up path
connecting the critical primary customers. Secondary customers requir
e only single connectivity to other customers and can use either prima
ry or secondary facilities. We propose a general multi-tier survivable
network design model to configure cost effective networks for this ty
pe of market segmentation, When costs are triangular, we show how to o
ptimally solve single-tier subproblems, with two critical customers, a
s a matroid intersection problem. We also propose and analyze the wors
t-case performance of tailored heuristics for several special cases of
the two-tier model. Depending upon the particular problem setting, th
e heuristics have worst-case performance ratios ranging between 1.25 a
nd 2.6. We also provide examples to show that the performance ratios f
or these heuristics are the best possible.