Economics of Internet Applications

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1 Economics of Internet Applications

2 Technology influences business models Technology decisions affect business models Business models influence technology decisions Example 1: the end2end principle TCP/IP, control at the edges of the network Example 2: Voice over IP (VoIP) H323: preserves vertically integrated control of carriers SIP: allows control to the edges of the network IMS: SIP-based architecture, provides control to network operators We would like to understand the economic implications of technology decisions in the Internet

3 The end2end principle Provides a rationale for moving a function upward in a layered system, closer to the application that uses the function (J.H. Saltzer, D.P. Reed and D.D. Clark) Result: most of the functions are moved to the edges of the network, network does simple tasks (IP) Internet: provides IP functionality only. Edges provide intelligence (TCP and up) freeway system Can not control edge applications Telephone network: assumes simple edge devices, has all the intelligence railroad tracks Controls services (creation, usage, pricing) -> Technology influences business models! but ideally these should be decoupled Analogy

4 The paradox of the simple network The simple network core (Internet) provides commodity services, cannot make money! Simplicity: key factor for success, low cost No bargaining position due to commoditization The best network is the hardest one to make money running! How to build a sustainable Internet? -> NGN, IPsphere What should be the business of future NSPs?

5 Signaling and competition The Internet evolves from being a research network New requirements, new design principles Important reality: different stakeholders of network infrastructure have interests that are adverse to each other := the tussle (David Clark) New network architecture must accommodate this tussle Application control = signaling protocols Example of tussle-ready signaling technologies: SIP, ENUM, IMS We examine such technologies to analyze their effects on competition: the range of tussle they allow

6 More about tussles Tussles can arise in several timescales design (& re-design) configuration time run-time Mirrors the business model More tussles happen here Whether a tussle, i.e. at run-time, will be enabled depends on the choices made on the earlier stages (design time, redesign time or configuration time) The role of a protocol designer is very important

7 Tussles in Internet protocols (1/3) BitTorrent BitTorrent users tussle with non-bittorrent users for bandwidth on shared links (BitTorrent operates in an aggressive manner) ISPs tussle with BitTorrent Users for limiting excess outgoing traffic to ISPs peers TCP End-users tussle over the usage of network resources

8 Tussles in Internet protocols (2/3) NAT Network administrators tussle with ISPs for more globally reachable IPv4 addresses IPv6 Network administrators tussle with RIRs for PI (Provider Independent) addresses in order to have autonomy (no switching cost), but original design of IPv6 specifically intended a pure hierarchy of addresses (Provider Aggregatable addresses) Designers - during standardisation - considered NAT to be universally bad, while users wanted its security features Led to incorporating features for local network protection

9 Tussles in Internet protocols (3/3) In November 2010, the U.S. government seized 82 domain names that aided file-sharing As a countermeasure, a P2P DNS is being implemented that bypasses traditional DNS A new TLD (Top-Level Domain) is proposed Less centralized control (First Come First Serve domain name allocation, non-trusted agents perform name resolution, ) New tussles: Website owners tussle for popular domain names Malicious nodes tussle with users ( cache poisoning, incorrect name resolution) ISPs tussle with users, nodes when queries to P2P DNS systems are dropped

10 Socio-economic tussles in the Internet Tussles arising in the Internet can have their roots in economic reasons (the focus of this presentation) social reasons Governments (in China, Egypt, N. Korea, ) tussle with Facebook and Twitter for restricting people on accessing/using their sites or both Facebook and Google tussle with users on the usage of their personal data for marketing reasons

11 Tussles and business models If a tussle is disabled before run-time it doesn t mean that it won t finally occur some stakeholders may invent a method (possibly out-of-band) to re-enable it Fear and Greed makes business models to evolve over time Fear = competition due to users choice Greed = stakeholders rationality

12 Principles for designing a tussle-ready protocol (1/2) Modularise the Design along Tussle Boundaries Ensure that where tussles exist, there are no spillovers on other functions, and the number of stakeholders is minimized Spillovers cause unnecessary burden to complementary protocols For example: NAT breaks the end-to-end principle May require to sacrifice (short-term) efficiency

13 Principles for designing a tussle-ready protocol (2/2) Design for choice from Trilogy project protocols should be designed in such a way that all the parties to an interaction have the ability to express their preferences for some key aspects Where to draw the line? Open interfaces is the first step (allows interoperation) A negotiation phase is necessary for taking preferences into account Useful properties can be: Exposure of list of choices Visible exchange of value Exposure of cost (or price) of choice Visibility of choices made

14 The role of service control The service control layer influences business models but a tussle-ready service control layer should enable business models Controls operation of applications and access to content Connects applications to network services Who controls the control?...? Applications, content Offered by other parties? Service & network control (through signaling) Network services Strategic role!! Offered by network operator

15 Technologies covered VoIP (briefly) SIP ENUM IMS

16 VoIP Voice over IP

17 VoIP Voice over IP VoIP: all forms of call setup & voice transmission using Internet protocol (IP) technology over private, managed IP-based networks or the public Internet PC-to-PC, PC-to-phone or phone-to-phone

18 The impact of VoIP Voice becomes just another application on the Internet VoIP means different things to different people ILECs & Mobile operators: threat to their main source of revenue as well as antidote (upfront CAPEX vs reduced OPEX and advanced services) IMS is supposed to be such an antidote CLECs: opportunity (lower barriers to entry) Wholesalers: opportunity (more alternatives to destination control) ASPs: new niche markets End-Users: more value, cost savings Regulator: dilemma

19 VoIP call phases VoIP telephone call procedure is similar to PSTN call setup: getting a dial tone, dialing a phone number, getting a ring or a busy signal at the far end, and picking up the phone to answer the call telephone conversation: voice samples digitized, compressed, packetized, transferred, reordered, buffered (causing extra delay), decompressed and converted back to analog Call control: mute, call-waiting, End of call: tear down but, more complicated since the voice application is decoupled from network services Call setup may involve many intermediaries; each one controls the next hop

20 SIP Session Initiation Protocol

21 Introduction to SIP SIP is an end-to-end session signaling protocol based on the request-response paradigm (client-server) but in a distributed way (through proxying): different control structures It defines how SIP devices will communicate SIP addresses are similar to addresses and used for locating the session s destination(s) In the context of VoIP: identify callee and callee s home provider SIP messages describe the action to be performed In the context of VoIP: call setup, call-state modifications, SIP entities reside at End-users (User Agent Client, User Agent Server) Providers (Proxy server, Location Server, Registrar Server)

22 User s registration with SIP After user registration, the provider gets significant control! This mapping is important for establishing sessions!

23 Invitation through one SIP Proxy server Name resolution to IP address when the two parties have registered to the same proxy SIP.

24 Invitation through one SIP proxy in redirect mode Name resolution to IP address when the called party has roamed to another proxy. Another business model would be the proxy himself to forward the INVITE to the next proxy.

25 SIP providers tussle for signaling control The end-user grants control to a home provider, because only this provider knows how other users (that learned a SIP address issued by this provider: mnemonic address) can reach her (even in case of roaming) An end-user can acquire any number of SIP addresses (free SIP addresses are also available), but will face a switching cost Public ENUM can minimize this switching cost, although some users are restrained to use locked devices A SIP-to-SIP call between different providers may not pass if there is no agreement Limited VoIP peering today leads to the appearance of intermediaries Alice s home Bob s home provider provider SIP INVITE SIP INVITE? Alice Control over incoming sessions Bob

26 SIP providers tussle for signaling control Call to Bob s PSTN Alice s home provider Intermediary ENUM? Bob s SIP Phone Alice s PSTN Phone phone number Control over outgoing sessions With Public ENUM, each provider on the signaling path may control what the next-hop provider will be. This choice may impact the quality seen by Alice.? Bob s home provider Bob s PSTN Phone SIP providers deploy back-to-back user agents Allows topology hiding, implementation of pre-paid services, load balancing and media control

27 SIP providers tussle for media control SIP was not designed for transporting data nor controlling media path but using Back-to-Back User Agents for topology hiding gives them the opportunity to do media traffic shaping A call is partitioned into sub-calls; B2BUAs perform mixing by acting both as User Agents and Proxy Servers User-provider tussles End users may want to use high quality codec, but providers not QoS may be degraded in case of many intermediaries (extra noise when mixing subcalls) B2BUA proxy B2BUA proxy SIP SIP SIP Alice media B2BUA User Agent media B2BUA User Agent media Bob sub-call sub-call sub-call

28 SIP and design principles Modularise the Design along Tussle Boundaries Is modular (decouples session management from session content done by SDP) Design for choice Enables visibility of choices made (i.e. the VIA attribute gives the signaling path) Sometimes enables visibility of available choices (i.e. when a proxy acts as a redirect server) However, it does not enable visible exchange of value and exposure of cost of choice about the signaling path used

29 ENUM telephone NUmber Mapping (or E.164 NUmber Mapping)

30 Introduction to Public ENUM (Public) ENUM is a global directory of services where users have signed-up and can be reached from Service examples: VoIP, voic , POTS Alternative ways to make a phone call to the same person (PSTN or mobile or VoIP) Bypassing PSTN with ENUM (IP-IP calls) 1. End user enters E.164 Number: (e.g., in to: field) 2. Application client formats number into FQDN (e.g., e164.arpa) and looks up name in DNS 3. DNS returns all NAPTR records associated with FQDN DNS ENUM is operating in a few countries (Germany, Switzerland, Austria, ) Registration is not obligatory (opt-in) 4. Application selects appropriate NAPTR record (e.g., and sends to SIP proxy IP-based Network

31 Tussles over user identifiers Public ENUM decouples E.164 telephone numbers from technology A user ( owner of a E.164 number) informs an ENUM registrar about the current services he is currently subscribed into and his preferences (he has control) In closed ENUM systems users preferences are absent, so providers have full control Public ENUM is not yet successful Due to limited VoIP peering User ckalog enters the following identifiers (in descending preference) tel: Subscriber (callee) faces a fixed fee, while callers are surely benefited Fear of spam calls Emergence of closed ENUM systems (in parallel to public ENUM) due to limited VoIP peering

32 Tussles over signaling control Public ENUM allows greater flexibility on finding the destination during session setup More control to the caller, her Home Provider and intermediaries (in decreasing order) The caller is not restricted to take into account the destination s preferences Accordingly, a provider may be able to query himself public ENUM and ignore user s choice A SIP provider can still refuse to accept an incoming call without a peering relationship the terminating provider would like to be compensated for his effort or at least know that he will be treated analogously in the future for calls that he will originate. This need for reciprocity leads to closed ENUM

33 Public ENUM and design principles Modularise the Design along Tussle Boundaries Is modular since the problem of calling a destination is decomposed into two tasks: find how the destination can be reached (perhaps by several means) and completing the call through one of all possible routes Design for choice Enables visibility of available choices Enables visible exchange of value (through ordering of available identifiers) Limited visibility of choices made (it acts as a directory; no negotiation takes place or statistics stored)

34 IMS IP Multimedia Subsystem

35 Introduction to IMS 3GPP (3rd Generation Partnership Project) is working on IMS 3G Release 6 (standardized version) Releases 7 and 8 are expected until mid 2007 & 2009 respectively SIP is the protocol used for session management A commercial step towards NGN Enables services that are independent from access network technologies IMS is a key functional block to support convergence based on all-ip Many consider IMS as the realization of 4G IMS is to enable the Service Provider to: Rapidly create services with reusing existing network resources Efficiently control user and network through authentication/ authorization and Dynamic Policy Control

36 IMS and NGN 4 layer architecture Services (application servers & content) Service Control (signaling elements) Network Control (policy servers) Transport (networking fabric) IMS does not define services it is a framework enabling to deliver SIP based services All services are rendered by IMS Applications servers & clients Allows for the horizontal decomposition of functions thus completing the IN initial objective IMS does not control the media path on its own IMS performs the policy decision per service request and the QoS functions of the actual network (e.g. G/MPLS routers) enforces the policy

37 IMS Main Components Call Session Control Function (CSCF): Set of entities for managing user sessions Proxy CSCF: UE s first point of contact (can be either on the visited or home network) Interrogating CSCF: a type of proxy for incoming SIP requests from other networks Serving CSCF: session controller assigned to subscriber (always on the home network) Home Subscriber Server (HSS): a database with subscriber information Registration example in case of roaming 200 OK REG P-CSCF 200 OK REG I-CSCF REG 200 OK S-CSCF Visited network Home network

38 Tussles over signaling control Home IMS Provider usually wants control over user s services A walled garden is the provider s policy to restrict the user experience in a specific set of services (the opposite is the open access policy) IMS can be configured so that multimedia services from some third-party ASPs are not available to users An open protocol (like SIP) is used in closed environments Transition from Single Provider walled gardens to Multi- Provider walled gardens In case a user roams, the provider still enforces the walled garden (participates in authentication and performs authorization, accounting and billing)

39 Example of a session between 2 roaming users in IMS A s visited network A s home network User A GPRS Required on registration, optional on session establish I-CSCF S-CSCF P-CSCF SIP I-CSCF Optional voice packets B s visited network B s home I-CSCF S-CSCF I-CSCF Required on registration, optional on session establish P-CSCF GPRS User B network

40 Tussles over service provision Component-based services : Each service can be decomposed into a mixture of components A component may be used by many services (e.g. charging, accounting, HLR) Components for the same task can belong to different providers (competition) Need for brokers But, IMS Providers may not give third party Application Developers access to an API of IMS, having negative impact on innovation (in general sense) i.e. expose user s geographic position (from HLR)

41 Tussles over media control B2BUA are used in IMS, also Since Home Provider can participate in the setup of all multimedia services he can also charge a VoIP packet differently from an HTTP packet IMS can control and manage the bandwidth allocated to the application and define its priority on the intra-domain level QoS collapses in the inter-domain level; need for contracts

42 IMS QoS Support The actual Network QoS for IMS services is provided by the Access Network (e.g. based on UMTS QoS) and the IMS network infrastructure (e.g. based on G/MPLS). During the setup of a session, user equipment (UE) requests network resources (carried in SDP) The proxy-cscf (P-CSCF) then forwards the SDP parameters to the Policy Decision Function (PDF) The PDF then authorizes the related media parameters, according to the users' media messages and the local policy. E.g. a G.711 call would be translated into real-time priority with 80 kbps IP bandwidth requirement After authorization, the authorized media parameters are returned to the UE and to the network element enforcing the policy (e.g. GGSN)

43 IMS and design principles Modularise the Design along Tussle Boundaries Signalling: IMS can be considered modular unless walled garden approach makes competing services inaccessible (thirdparty ASPs and developers are new stakeholders) Media: IMS can be considered modular unless quality of competing services is deteriorated (third-party ASPs and developers are new stakeholders) Design for choice It depends on the configuration of the protocol used to perform a function i.e. SIP for signaling but it may be more difficult to configure it so that IMS enables choices

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