On the economic viability of network systems and architectures

Understanding the relationship between technology and economics is fundamental to making judicious policy and design decisions. Many technologies that are successful in meeting their technical goals often fail to get adopted due to economic factors. This holds true even for networked systems, e.g., the Internet, which witnessed failures in the adoption of QoS solutions, IPv6 migration etc., due to factors such as high costs, lack of demand, and weight of incumbency. To gain better insights into these issues, researchers need access to analytical frameworks that account for both technological and economic factors and provide useful design guidelines. This dissertation was motivated primarily by the need to undertake such a holistic, multidisciplinary approach towards creating such analytical frameworks. We focus on three important aspect related to deployment, adoption, and design of network systems and architectures. The Internet has been one of the most successful network technologies, serving both as a shared platform for easy deployment of new services and a driver for their adoption. But recent trends in convergence of voice, video, and data services, along with advances in virtualization technologies, raise questions as to whether deploying heterogeneous services on a shared network is right or not, especially given the operational complexity and costs involved. We develop a model to investigate the trade-offs between shared and dedicated infrastructures and identify the operational metrics that influence which infrastructure choice benefits more from resource reprovisioning. Closely related to the issue of network service deployment is that of its successful adoption, which serves as the second topic of this dissertation. An entrant’s success hinges not only on technical superiority but also on other factors, including its ability to win over an incumbent’s installed base by using gateways. Our model for adoption of competing technologies reveals several interesting behaviors, including the possibility for converters to reduce overall market penetration across both technologies and to prevent the convergence of the adoption process to a stable state. Lastly, we consider the issue of network platform design. The emergence and adoption of new technologies depend on the functional capabilities provided by the underlying network platform. Answering whether the minimalist design of Internet is still relevant as it evolves into an ecosystem of software services, require a cost-benefit analysis of choosing between a functionality-rich and a minimalist design. We develop a two-sided market model to show how this design choice crucially depends on the relationship between the cost of adding features to the platform and the benefits that application developers derive from them. The frameworks developed in this dissertation have the potential for application in many different network settings, and can spur further research on various topics in network economics