the user can proceed to request services from the
provider.
Users' public keys are stored by service
providers for use in validating future Service
Level Agreement (SLA) requests. In this way, the
service provider need not validate with the billing
provider for each SLA provisioned.
3.3 Pricing
Pricing is concerned with generating the instantiated
values to be used within a charging model.
Pricing of service level agreements in the
QDINE framework is not limited to one specific
pricing mechanism. The pricing mechanism for any
particular SLA instance is encapsulated within
prices quoted on the SLA.
The actual mechanisms used to generate
individual prices to be used in an SLA offer are
implementation specific. The QDINE project has
developed an intelligent pricing mechanism based
on limited supply and the pre-emptive capability of
differentiated service networks(Debenham, 2004)
for use in testing the billing framework. The pricing
mechanism adopted by a service provider will be
based around that service provider's business model.
The billing framework is designed to be independent
of any specific pricing mechanism.
3.4 Speculation
Speculation can play a major part in pricing of any
good or service. To understand the role speculation
may play in the QDINE project, existing
telecommunication trading is examined.
Beginning around 1998, bandwidth commodity
markets such as Band-X (Band-X), Arbinet
(Arbinet) and Bandwidth Market Ltd (Bandwidth
Market) have emerged, trading point to point
bandwidth as a commodity on an open market.
Unlike the majority of traded commodities such
as gold or electricity, spot bandwidth is a temporal,
non storable commodity (Chiu et al., 1999). As such,
it cannot be purchased today, stored and released
back onto the market at a later time. If it is not used
when purchased, it is lost.
Financial market speculation involves buying,
holding and selling a financial asset to benefit from
fluctuations in price. Due to its non-storable nature,
financial bandwidth speculation does not lend its self
to spot markets, but to derivative markets such as
futures and options.
Using futures and options, a speculator can
manage risk in a market place by purchasing SLAs
for future time periods, or purchasing the option to
buy or sell predefined SLAs in the future at a
predetermined price.
Success of bandwidth markets and exchanges has
been limited for a number of reasons. Firstly,
network operators do not want their main source of
income, i.e. Bandwidth, to be devalued and sold as a
simple commodity with no product differentiation.
Additionally, lack of standardised contracts and
negotiation protocols for bandwidth trading has been
a problem, along with long provisioning cycles once
trades have occurred (Borthick, 2001).
The QDINE service negotiation framework does
not aim to commoditise network bandwidth.
However, services will be specified in a common
format. It can be assumed that within a distributed,
open, well defined SLA trading environment such as
the QDINE framework, speculation over network
services will occur.
Three types of speculation are identified.
1. If an asset is to be purchased and held for a period
of time, speculation is made on the value of that
asset for the duration of the ownership.
2. If an asset is purchased to be divided into smaller
lots for resale, there is speculation on the future
value and demand of the divided lots.
3. “Pure” financial market speculation, involving the
purchase, holding and selling of a financial asset
to benefit from fluctuations in price.
Below are the speculative activities carried out
by a billing provider in the QDINE project.
3.4.1 Customer Side Biller Speculation
The billing provider (BP) speculates on service use
by a customer over a future period and offers an
agreement for some future service period to one or
more of its customers. A simple scenario of
customer side speculation is outlined below.
• Billing provider proposes a deal to a customer -
“You can get 30 hours of grade 1 video
conference per month from any of {Optus,
Telstra, Vodaphone} during the next month for
$30.
• If the customer accepts, the User Agent then
knows it will cost $1 per hour for the first 30
hours from the specified providers for grade 1
video service.
• The User Agent negotiates as normal for services,
receiving quotes for current market prices for
requested services. The User Agent knows
however, that within its first 30 hours for the
month for grade 1 video calls prom participating
providers, no matter what the actual price
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