Towards an auction-based Internet

The post below was quoted and discussed extensively in (see the link) GigaOM, 14 Jan 2011 – Software Defined Networks could create an auction-based bazaar.

Published in Telecom Asia, Jan 13,2012 – Towards an auction-based internet

Are we headed to an auction-based Internet? This train of thought (no pun intended), which struck me while I was travelling from Chennai to Bangalorelast evening, was the result of the synthesis  of different ideas and technologies which I had read  in the recent past.

The current state of technology and the technology trends do seem to indicate such a possibility.  An auction-based internet would be a business model in which bandwidth would be allocated to different data traffic on the internet based on dynamic bidding by different network elements. Such an eventuality is a distinct possibility considering the economics and latencies involved in data transfer, the evolution of the smart grid concept and the emergence of the promising technology known as the OpenFlow protocol.  This is further elaborated below

Firstly, in the book “Grids, cloud and virtualization”, by Massimo Caforo and Giovanni Aloisio, the authors highlight a typical problem of the computing infrastructure of today. In the book, the authors contend that a key issue in large scale computing is data affinity, which is the result of the dual issues of data latency and the economics of data transfer. They quote, Jim Gray (Turing award in 1998) whose paper on “Distributed Computing Economics” states that that programs need to be migrated to the data on which they operate rather than transferring large amounts of data to the programs.  This is in fact used in the Hadoop paradigm, where the principle of locality is maintained by keeping the programs close to the data on which they operate.

The book highlights another interesting fact. It says “cheapest and fastest way to move a Terabyte cross country is sneakernet (i.e. the transfer of electronic information, especially computer files, by physically carrying removable media such as magnetic tape, compact discs, DVDs, USB flash drives, or external drives from one computer to another). Google used sneakernet to transfer 120 TB of data. The SETI@home also used sneakernet to transfer data recorded by their telescopes inArecibo, Puerto Rico stored in magnetic tapes toBerkeley,California.

It is now a well known fact that mobile and fixed line data has virtually exploded clogging the internet. YouTube, video downloads and other streaming data choke the data pipes of the internet and Service Providers have not found a good way to monetize this data explosion. While there has been a tremendous advancement in CPU processing power (CPU horsepower in the range of petaflops) and enormous increases in storage capacity(of the order of petabytes) coupled with dropping prices,  there has been no corresponding drop in bandwidth prices in relation to the bandwidth capacity.

Secondly, in the book “Hot, flat and crowded” Thomas L. Friedman  describes the “Smart Homes” of the future in which all the home appliances will have sensors and will participate in the energy auction in real time as a part of the Smart Grid.  The price of energy in the Energy Grid fluctuates like stock prices since enterprises are bidding for energy during the day. In his Smart Home, Friedman envisions a situation in which the washing machine will turn on during off-peak hours when the prices of energy in the energy grid is low. In this way all the appliances in the homes of the future will minimize energy consumption by adjusting the cycles accordingly.

Why could not the internet also behave in a similar fashion? The internet pipes get crowded at different periods of the day, during seasons and during popular sporting events. Why cannot we have an intelligent network in place in which price of different data transfer rates vary depending on the time of the day, the type of traffic and the quality of service required.  Could the internet be based on an auction-mechanism in which different devices bid for bandwidth based on the urgency, speed and quality of services required? Is this possible with the routers, switches of today?

The answer is yes. This can be achieved by the new, path breaking innovation known as Software Defined Networks (SDNs) based on the OpenFlow protocol. SDN is the result of pioneering effort by Stanford University and University of California, Berkeley and is based on the Open Flow Protocol and represents a paradigm shift to the way networking elements operate.  Do read my post Software Defined Networks : A glimpse of tomorrow   for a more detailed look at SDNs. SDNs can be made to dynamically route traffic flows based on decisions in real time.  The flow of data packets through the network can be controlled in a programmatic manner through the OpenFlow protocol. In order to dynamically allocate smaller or fatter pipes for different flows, it necessary for the logic in the Flow Controller to be updated dynamically based on the bid price.

For e.g. we could assume that a corporate has 3 different flows namely, immediate, (ASAP), price below $x. Based on the upper ceiling for the bid price, the OpenFlow controller will allocate a flow for the immediate traffic of the corporation. For the ASAP flow, the corporate would have requested that the flow be arranged when the bid price falls between a range $a – $b. The OpenFlow Controller will ensure that it can arrange for such a flow. The last type of traffic which is not important it will be send during non-peak hours. This will require that the OpenFlow controller be able to allocate different flows dynamically based on winning the auction process that happens in this scheme. The current protocols of the internet of today namely RSVP, DiffServ allocate pipes based on the traffic type & class which is static once allocated. This strategy enables OpenFlow to dynamically adjust the traffic flows based on the current bid price prevailing in that part of the network.

The ability of the OpenFlow protocol to be able to dynamically allocate different flows will once and for all solve the problem of being able to monetize mobile and fixed line data.  Users can decide the type of service they are interested and choose appropriately. This will be a win-win for both the Service Providers and the consumer. The Service Provider will be able to get a ROI for the infrastructure based on the traffic flowing through his network. The consumer rather than paying a fixed access charge could have a smaller charge because of low bandwidth usage.

An auction-based internet is not just a possibility but would also be a worthwhile business model to pursue. The ability to route traffic dynamically based on an auction mechanism in the internet enables the internet infrastructure to be utilized optimally. It will serve the dual purpose of solving traffic congestion, as highest bidders will get the pipe but will also monetize data traffic based on its importance to the end user.

An auction based internet is a very distinct possibility in our future given the promise of the OpenFlow protocol.

All  thoughts, ideas or counter opinions are welcome!

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3 thoughts on “Towards an auction-based Internet

  1. The idea of bandwidth trading is not new, first proposed by Enron, the king of scamsters. Google on that for more info. Also, the internet operates globally, most of the data transfer is run by automated processes. There may not be an off-peak period as in the sense of electricity usage within a single time zone.

    • Sriram – Thanks for the comment. I did check the Enron concept of bandwidth trading. But I guess that is slightly different. They talk of bulk bandwidth trading. What I am suggesting is that each connection is able to negotiate required bandwidth and price using the innovative OpenFlow protocol. I am certain bandwidth auction coupled with OpenFlow is a new concept. Current internet data exchange policies are determined by DiffServ and RSVP. Thanks for the response anyway.

  2. Pingback: A method for optimal bandwidth usage by auctioning available bandwidth using the OpenFlow protocol « Giga thoughts …

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