Economics, Design

We advocate to create a spot Internet transit market, where transit is sold using the under-utilized backbone capacity at a lower price. The providers can improve profit by capital-izing the perishable capacity, and customers can buy transit on-demand without a minimum commitment level for elastic traffic, and as a result improve its surplus (i.e. utility gains). We conduct a systematic study of the economical benefits of spot transit both theoretically and empirically. We pro-pose a simple analytical framework with a general demand function, and solve the pricing problem of maximizing the expected profit, taking into account the revenue loss of reg-ular transit when spot transit traffic hikes. We rigorously prove the price advantage of spot transit, as well as profit and surplus improvements for tier-1 ISPs and customers, re-spectively. Using real-world price data and traffic statistics of 6 IXPs with more than 1000 ISPs, we quantitatively eval-uate spot transit and show that significant financial benefits can be achieved in both absolute and relative terms, robust to parameter values