Notes on cumulus pricing and time-scale aspects of internet tariff design

Abstract

This report deals with design issues for Internet tariff schemes. It proposes a framework that is able to explain why current tariff proposals look like as they do, and why there cannot exist tariffs that are significantly different from the existing ones. Moreover, it is demonstrated how an extension of this framework allows to design a new tariff that eventually even solves the so-called “feasibility problem”, i.e. the trade-off between technical, economical and user-based requirements. To this end, the general focus is directed towards time-scales. There are four time-scales identified as being relevant for Internet tariffing, and the close relationship between these time-scales and existing tariffs is demonstrated. Afterwards, the notion of “tariff reaction” is introduced, and the Cumulus Pricing Scheme CPS is presented as leading example of the resulting new tariff structures. The second part of the report deals with some important mathematical results for CPS and various implementation aspects as well as a couple of open issues to be answered by simulation.