Pricing games of NFV infrastructure providers

Abstract

AbstractFuture online services will be provisioned over the federation of infrastructure providers for economic reasons: for effective usage of resources and for a wide geographic reach of customers. The technical enablers of this setup, envisioned also for 5G services, are the virtualization techniques applied in data centers, and in access and core networks. Business aspects around the provisioning of these services however pose still unresolved questions. In this heterogeneous setup those who want to deploy an online service face the problem of selecting the compute and network resource set that fulfills the technical requirements of the service deployment and that is preferable also from an economic point of view. Infrastructure providers compete among themselves for these customers, and shape their business offerings with profit maximization in mind. We model this resource market with the tool set of graph and game theory in order to study its characteristics. We show that customers need to tackle a hard problem if they want to meet both their technical and business needs, let alone minimizing costs. Furthermore, we derive the best pricing strategies that the providers should follow given their expectation about customers’ demand. Interestingly, we show that equilibrium prices and the attainable income strongly depend on the provider’s location within the network.