On the Economics of Interconnection among Hybrid QoS Networks in the Next Generation Internet Junseok Hwang and Martin B. H. Weiss hwang@tele.pitt.edu mbw+@pitt.edu Telecommunications Program University of Pittsburgh Pittsburgh PA 15260 April 14th, 2000 Abstract How do different QoS (Quality of Service) mechanisms affect the resource and quality allocations over the interconnection of the future Internet? What will be the consequences on the economics of interconnection and its settlements? These are important questions that arise with the evolution of the Internet as a network of QoS networks that support a variety of performance requirements. The convergence of various telecommunications networks relies critically on the interconnections of various networks and related QoS management and assurance. Furthermore, the heterogeneity of the proposed QoS support mechanisms intensifies the importance and integrity of these research questions related to the network interconnection. In this paper, we will address the economic problems of network resource management over hybrid-QoS networks. This study proposes that interconnecting QoS networks will manage both QoS pricing and QoS bandwidth allocation for optimal interconnection, and different QoS networks will have different optimal QoS allocation policies due to different marginal costs (marginal bandwidth opportunity cost) associated with each QoS