© 2018 IEEE. Server migration service (SMS) has been proposed as a new class of service to augment the existing IaaS (Infras-tructure as a Service) cloud service. SMS allows servers (server-side processes of a network application) to dynamically and automatically migrate close to their clients (client-side processes of the network application) in order to reduce the penalty that the SMS provider pays to is SMS subscribers when failing to provide them with the guaranteed level of QoS. In this paper, we tackle a link capacity provisioning and server location decision problem where we consider the sum of link capacity provisioning cost and the penalty as the total expenditure of SMS business, and aim at minimizing the total expenditure. In the problem, we determine how much capacity to add to links, and when and to which location to migrate servers. We formulate the problem as an integer programming model, solve the model, and obtain the optimal link capacities, server locations at each time, and the global optimum value of the total expenditure of SMS business. Numerical examples show that the proposed method decreases the total expenditure of SMS business by up to 49% compared to a conventional method that determines the server locations while fixing the link capacities.