Open system designs for developing bandwidth market

Transcription

1 Open system designs for developing bandwidth market Przemysław Kacprzak Mariusz Kaleta Kamil Kołtyś Piotr Pałka Eugeniusz Toczyłowski Izabela Żółtowska Institute of Control and Computation Engineering Warsaw University of Technology, Poland Euro-NF Socio-Economics Workshop October 16-17, 2008, Athens, Greece Warsaw University of Technology Open system designs for developing... 1 / 23

2 Introduction Goal of presentation We present discussion on bandwidth market development and role of information systems (IS) on such market How could the bandwidth market develop? What are the directions of business relationships changes? How can the information systems affect market development? How should IS be arranged to alleviate the barriers for further market development? Warsaw University of Technology Open system designs for developing... 2 / 23

3 Introduction Outline 1 Introduction Bandwidth market background Bandwidth trading: current state and needs 2 Bandwidth market development Market evolution foundations and scenarios Multi-commodity market models 3 Role of information systems (IS) Barriers and potentials of IS Open solutions Warsaw University of Technology Open system designs for developing... 3 / 23

4 Introduction Bandwidth market background Bandwidth market reemerging idea Mid 90 s: enthusiasm Deregulation: new entrants plus bandwidth demand growth Trading services emerge: BandX, RateXchange, Enron,... More new entrants: energy and finance companies Years : bankruptcy of many participants (Enron) illiquidity low standardization over supply technical incompatibilities bandwidth prices fall...? From about 2003: need and possibilities for bandwidth trading Practitioners and researchers make efforts to market reemerge Opportunities: new technologies, new concepts Warsaw University of Technology Open system designs for developing... 4 / 23

5 Introduction Bandwidth market background Bandwidth: product specification Bandwidth is a key product in telecommunications industry Capacity to transport data between A and B over time interval Bandwidth is a special kind of commodity Besides volume (bps), quality of connection is important Bandwidth interpretation depends on network layer (IP SDH) Upper-lower layer relationship: switching and multiplexing Nodes and connections locations define product value (new feature: network arbitrage) Demand and supply depend on technology development and regulation policies risk Conclusion: Trading and offering bandwidth require comprehensive market models and structures Warsaw University of Technology Open system designs for developing... 5 / 23

6 Introduction Bandwidth trading: current state and needs How supply meets demand today? Bilateral agreements time consuming, customized products, market power Electronic bulletin boards only simple products Brokers expensive (10-20%) and they don t take a risk Warsaw University of Technology Open system designs for developing... 6 / 23

9 Introduction Bandwidth trading: current state and needs Buyers and sellers special needs not quite covered today Most urgent requirements Possibility to resell bandwidth contracts Facilitated paths configuration Diversity on multiple routes supporting How can the bandwidth market satisfy these? New, more complex business relationships models Market participants evolution New transaction structures: auctions, multi-commodity trade Warsaw University of Technology Open system designs for developing... 7 / 23

10 Bandwidth market development Market evolution foundations and scenarios Market evolution foundations Centralized approach Integral, complex project of bandwidth market model Role of central institutions Warsaw University of Technology Open system designs for developing... 8 / 23

11 Bandwidth market development Market evolution foundations and scenarios Market evolution foundations Centralized approach Integral, complex project of bandwidth market model Role of central institutions Barriers: economical, organizational,... Strong barriers for large changes No solutions acknowledged as the best one Centralized approach too risky Warsaw University of Technology Open system designs for developing... 8 / 23

12 Bandwidth market development Market evolution foundations and scenarios Market evolution foundations Centralized approach Integral, complex project of bandwidth market model Role of central institutions Evolutionary approach Lesser role of central institutions Bottom-up initiatives Information systems barriers: functional, informational, financial Conditions for evolutionary development Role of IT enterprisers Warsaw University of Technology Open system designs for developing... 8 / 23

13 Bandwidth market development Market evolution foundations and scenarios Scenario 1: evolution of a central market Market operator manages all offering processes Next step: decentralization of responsibilities (local markets, exchanges) Total decentralization Central operator can still serve as coordinator and information provider Warsaw University of Technology Open system designs for developing... 9 / 23

16 Bandwidth market development Market evolution foundations and scenarios Scenario 2: bottom-up evolution Natural market development New business roles and relationships that can evolve independently: local group aggregate: several interconnected bandwidth providers to reach more new buyers to swap free capacity to improve quality standards to speed up negotiations bandwidth buyers aggregator: SPs connected in exchange point economy of duration economy of scale intermediary broker representing clients to earn on network arbitrage to reach other segments exchange: new business tools adaptation auctions, risk management Warsaw University of Technology Open system designs for developing / 23

21 Bandwidth market development Multi-commodity market models Multi-commodity market models Traded commodities Network links (sell) Network paths (buy) BCBT model Multi-commodity exchange model Joint optimization of many elementary offers to maximize market benefits Simultaneous bandwidth allocation to all different links Warsaw University of Technology Open system designs for developing / 23

24 Bandwidth market development Multi-commodity market models BCBT models and variants ( ˆQ ) = max d D E d x d e E Sexe 0 x d h d, d D (1) 0 x e y e, e E (2) x ed x e, e E (3) d D 0 x ed, e E, d D (4) { xd v = s d a vex ed = 0 v s d, t d, v V, d D (5) e E x d v = t d x e 0, e E (6) BCBT model variants Aggregated commodities Indivisible units of bandwidth Directed undirected bandwidth Inter layer dependencies Warsaw University of Technology Open system designs for developing / 23

25 Role of information systems (IS) Barriers and potentials of IS IS and market mechanism implementations IS are necessary to implement market mechanism Large market data processing Short-time processing requirements Needs for achievements of supremacy over other competitors... An integration environment for IS is desirable Warsaw University of Technology Open system designs for developing / 23

26 Role of information systems (IS) Barriers and potentials of IS IS perspectives IS can be perceived form different perspectives Market processes perspective: tenders, balancing, accounting, measurement processes,... Market entity activities perspective: brokers, buyers, sellers, market operators, aggregators,... Architecture perspective: functions (business processes), data & communication, physical Warsaw University of Technology Open system designs for developing / 23

27 Role of information systems (IS) Barriers and potentials of IS IS perspectives IS can be perceived form different perspectives Market processes perspective: tenders, balancing, accounting, measurement processes,... Market entity activities perspective: brokers, buyers, sellers, market operators, aggregators,... Architecture perspective: functions (business processes), data & communication, physical Bandwidth market evolution information evolution Market entities requirements are changing Business models, processes and functions are changing Scope of data flowing between market entities are changing Arrangement of data flow are changing Warsaw University of Technology Open system designs for developing / 23

28 Role of information systems (IS) Barriers and potentials of IS Barriers formed by IS Functional barriers Not known evolving requirements New business models, processes and relationships not known Expressiveness in the actual IS is low Informative barriers Transition thorough evolution steps requires data models changes Current data models narrow ground for pro-effective changes Cost barriers Market entry costs: many incompatible interfaces Adaptation costs, IS changes aversion costs Lost opportunities due to limited competition Warsaw University of Technology Open system designs for developing / 23

29 Role of information systems (IS) Barriers and potentials of IS Alleviation the barriers What can be done? The integration environment as a framework for embedded market agents should be capable for evolution Information interchange mechanisms Data models Technical standards In that situation the primary role of IT sector is in Providing open IS, elastic, based on multi-commodity turnover systems Eliminating non-elastic solutions, which potentially may block market development or generate excessive costs Warsaw University of Technology Open system designs for developing / 23

30 Role of information systems (IS) Open solutions What is the open information system? Tools opened for future functionality Broad network structure, large number of agents Products complexity: bandwidth indivisibility, paths diversity, quality standards, inter-layer dependencies Open solution in the area of Technical issues Implementation of standards with development potential Well-specified, documented inter-components interfaces Conceptual solutions Concepts, algorithmic components easily adjustably (evolution) Warsaw University of Technology Open system designs for developing / 23

31 Role of information systems (IS) Open solutions Open solution stages From IS revolution to evolution Functional modules and data model replacement Market model 1 Functions F1 Data model D1 Market model 2 Data model D2 Market model 3 Data model D3... Functional modules replacement and data model tuning Market model 1 Functions F1 Data model D1 Market model 2 Data model D1 Market model 3 Data model D1... Functions and data models tuning. Limited function modules replacement Market model 1 Data model D1 Market model 2 Data model D1 Market model 3 Data model D1... Warsaw University of Technology Open system designs for developing / 23

32 Role of information systems (IS) Open solutions Achievement of the open solution stages Functions of the systems Diverse market models may have common components General multi-commodity model covers variety of approaches IS based on multi-commodity trading will alleviate the barriers for changes Mathematical model, elementary objects, model elements will remain unchanged Dictionary elements must be defined: commodities, offers,... Data and communication IS based on wide standards for data interchange Warsaw University of Technology Open system designs for developing / 23

33 Role of information systems (IS) Open solutions Multi-commodity Market Model M 3 M 3 Open, common model for data and communication to describe balancing process on multi-commodity market Standardization of communication between market entities based on XML time saving formatting, selling and receiving data data integration: different trading models may use the same data structure Creating exchangeable software components, easy to assemble Creating data and knowledge platform for research centers Not limited to any specific technology solution, based on modern and widely acknowledged standards Reduces implementation and support costs Warsaw University of Technology Open system designs for developing / 23

34 Role of information systems (IS) Open solutions Layers of M 3 model Mathematical model (multi-commodity trade) Conceptual data model (as UML class diagrams) Logical data models Static XML documents schemes Exemplary relational structure Communication models XML schemes for messages Information flow models (including UML sequence diagrams) Web services definitions Warsaw University of Technology Open system designs for developing / 23

35 Role of information systems (IS) Open solutions Conceptual layers relationships Warsaw University of Technology Open system designs for developing / 23

36 Role of information systems (IS) Open solutions Conclusions How could the bandwidth market develop? Bandwidth market is in elementary stage potential to evolve How can the information systems affect market development? The potential barriers are strong. Information systems can support or hamper necessary development How should IS be arranged to alleviate barriers for further market development? Development barriers shall be obviated by investing in open solutions in data and communication layer and functional layer: M 3 ready solution Warsaw University of Technology Open system designs for developing / 23