We present an approach to Service Provisioning with Quality of Service (QoS) requirements in ATM networks. The ATM network provides services to users every
$\widehat{T}$
units of time. Each service is characterized by its one way route, its input traffic constraints and its provided QoS. The input traffic constraints consist of the maximum input rate and an upper bound on the burstiness curve. The QoS provided is defined by the maximum percentage of cell loss along the route and the maximum end‐to‐end cell delay. The service provisioning problem is defined as follows: determine the amount, price and required resources (bandwidth and buffers) for each type of service, that maximize a social welfare function that consists of the network’s revenue and the users’ surplus. This problem is solved every
$\widehat{T}$
units of time and the allocation is made only over the available resources, that is, those that are not used by connections that are still active. We prove the existence of a solution to the Service Provisioning Problem and we also suggest an iterative procedure that interprets the solution. The network adjusts the prices to maximize the welfare function and also to guarantee that the allocated resources do not exceed the available resources. Based on these prices, users request a new allocation that minimizes their cost and the network adjusts again the prices based on the new allocation. The above procedure has the following features: (i) the network needs to know only the average request rate for each type of service, their route and the resources requested by the users; (ii) users need to know only their private information (input traffic constraints and QoS requirements), their route, and the prices for resources announced by the network.
