Optimization of Internet interconnection policy in the top percentile pricing framework

Internet is a worldwide network composed of interconnected but independent networks, called Autonomous Systems. Each network owner has to decide which other networks to interconnect with and how to allocate its traffic among its providers. The financial flows between Autonomous Systems depend on these decisions and raise the key issue of revenue management. In this paper, we propose some models and exact methods for the joint optimization problem of interconnection policy and traffic allocation for a customer AS. This problem is analyzed in the top-percentile pricing framework for the interconnection agreements, and we assess the solution methods using real-life instances.