diff --git a/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/HttpPipelineHelper.cs b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/HttpPipelineHelper.cs
index 7b080a85dbd1..5e26b4ab9fb4 100644
--- a/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/HttpPipelineHelper.cs
+++ b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/HttpPipelineHelper.cs
@@ -49,6 +49,25 @@ internal static int GetRetryInterval(Response httpResponse)
             return MinimumRetryInterval;
         }
 
+        internal static bool TryGetRetryIntervalTimespan(Response? httpResponse, out TimeSpan retryAfter)
+        {
+            if (httpResponse != null && httpResponse.Headers.TryGetValue(RetryAfterHeaderName, out var retryAfterValue))
+            {
+                if (int.TryParse(retryAfterValue, out var delaySeconds))
+                {
+                    retryAfter = TimeSpan.FromSeconds(delaySeconds);
+                    return true;
+                }
+                if (DateTimeOffset.TryParse(retryAfterValue, out DateTimeOffset delayTime))
+                {
+                    retryAfter = (delayTime - DateTimeOffset.Now);
+                    return true;
+                }
+            }
+
+            return false;
+        }
+
         internal static byte[]? GetRequestContent(RequestContent? content)
         {
             if (content == null)
diff --git a/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/TransmissionState.cs b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/TransmissionState.cs
new file mode 100644
index 000000000000..3e4e078ce3c3
--- /dev/null
+++ b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/TransmissionState.cs
@@ -0,0 +1,18 @@
+// Copyright (c) Microsoft Corporation. All rights reserved.
+// Licensed under the MIT License.
+
+namespace Azure.Monitor.OpenTelemetry.Exporter.Internals
+{
+    internal enum TransmissionState
+    {
+        /// <summary>
+        /// Represents disabled transmission.
+        /// </summary>
+        Open,
+
+        /// <summary>
+        /// Represents enabled transmission.
+        /// </summary>
+        Closed
+    }
+}
diff --git a/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/TransmissionStateManager.cs b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/TransmissionStateManager.cs
new file mode 100644
index 000000000000..8d6483cabd0b
--- /dev/null
+++ b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/src/Internals/TransmissionStateManager.cs
@@ -0,0 +1,165 @@
+// Copyright (c) Microsoft Corporation. All rights reserved.
+// Licensed under the MIT License.
+
+using System;
+using System.Threading;
+
+namespace Azure.Monitor.OpenTelemetry.Exporter.Internals
+{
+    internal class TransmissionStateManager : IDisposable
+    {
+        private const int MaxDelayInSeconds = 3600;
+
+        private const int MinDelayInSeconds = 10;
+
+        private readonly Random _random = new();
+
+        /// <summary>
+        /// Minimum time interval between failures to increment consecutive error count.
+        /// </summary>
+        private TimeSpan _minIntervalToUpdateConsecutiveErrors = TimeSpan.FromSeconds(20);
+
+        /// <summary>
+        /// Time threshold after which consecutive error count can be incremented.
+        /// </summary>
+        private DateTimeOffset _nextMinTimeToUpdateConsecutiveErrors = DateTimeOffset.MinValue;
+
+        private readonly System.Timers.Timer _backOffIntervalTimer;
+
+        private double _syncBackOffIntervalCalculation;
+
+        private int _consecutiveErrors;
+        private bool _disposed;
+
+        internal TransmissionState State { get; private set; }
+
+        internal TransmissionStateManager()
+        {
+            _backOffIntervalTimer = new();
+            _backOffIntervalTimer.Elapsed += ResetTransmission;
+            _backOffIntervalTimer.AutoReset = false;
+            State = TransmissionState.Closed;
+        }
+
+        /// <summary>
+        /// For test purposes.
+        /// </summary>
+        /// <param name="random"></param>
+        /// <param name="minIntervalToUpdateConsecutiveErrors"></param>
+        /// <param name="nextMinTimeToUpdateConsecutiveErrors"></param>
+        /// <param name="backOffIntervalTimer"></param>
+        /// <param name="state"></param>
+        internal TransmissionStateManager(
+            Random random,
+            TimeSpan minIntervalToUpdateConsecutiveErrors,
+            DateTimeOffset nextMinTimeToUpdateConsecutiveErrors,
+            System.Timers.Timer backOffIntervalTimer,
+            TransmissionState state)
+        {
+            _random = random;
+            _minIntervalToUpdateConsecutiveErrors = minIntervalToUpdateConsecutiveErrors;
+            _nextMinTimeToUpdateConsecutiveErrors = nextMinTimeToUpdateConsecutiveErrors;
+            _backOffIntervalTimer = backOffIntervalTimer;
+            State = state;
+        }
+
+        /// <summary>
+        /// Stops transmitting data to backend.
+        /// </summary>
+        private void OpenTransmission()
+        {
+            State = TransmissionState.Open;
+        }
+
+        /// <summary>
+        /// Enable transmitting data to backend.
+        /// To be called for each successful request or after back-off interval expiration.
+        /// </summary>
+        internal void CloseTransmission()
+        {
+            State = TransmissionState.Closed;
+        }
+
+        /// <summary>
+        /// Resets consecutive error count.
+        /// To be called for each successful request.
+        /// </summary>
+        internal void ResetConsecutiveErrors()
+        {
+            Interlocked.Exchange(ref _consecutiveErrors, 0);
+        }
+
+        internal void ResetTransmission(object source, System.Timers.ElapsedEventArgs e)
+        {
+            CloseTransmission();
+        }
+
+        internal void EnableBackOff(Response? response)
+        {
+            if (Interlocked.Exchange(ref _syncBackOffIntervalCalculation, 1) == 0)
+            {
+                // Do not increase number of errors more often than minimum interval.
+                // since we can have 4 parallel transmissions (logs, metrics, traces and offline storage tranmission) and all of them most likely would fail if we have intermittent error.
+                if (DateTimeOffset.UtcNow > _nextMinTimeToUpdateConsecutiveErrors)
+                {
+                    Interlocked.Increment(ref _consecutiveErrors);
+                    _nextMinTimeToUpdateConsecutiveErrors = DateTimeOffset.UtcNow + _minIntervalToUpdateConsecutiveErrors;
+
+                    // If backend responded with a retryAfter header we will use it
+                    // else we will calculate by increasing time interval exponentially.
+                    var backOffTimeInterval = HttpPipelineHelper.TryGetRetryIntervalTimespan(response, out var retryAfterInterval) ? retryAfterInterval : GetBackOffTimeInterval();
+
+                    if (backOffTimeInterval > TimeSpan.Zero)
+                    {
+                        OpenTransmission();
+
+                        _backOffIntervalTimer.Interval = backOffTimeInterval.TotalMilliseconds;
+
+                        _backOffIntervalTimer.Start();
+                    }
+                }
+
+                Interlocked.Exchange(ref _syncBackOffIntervalCalculation, 0);
+            }
+        }
+
+        /// <summary>
+        /// Calculates the time interval for which the transmission should be halted.
+        /// Number of consecutive errors are taken in to account to increase the time.
+        /// Random variation is introduced in order to avoid collision.
+        /// </summary>
+        /// <returns>BackOff time interval.</returns>
+        internal TimeSpan GetBackOffTimeInterval()
+        {
+            double delayInSeconds = 0;
+            if (_consecutiveErrors > 0)
+            {
+                double backOffSlot = (Math.Pow(2, _consecutiveErrors) - 1) / 2;
+                var backOffDelay = _random.Next(1, (int)Math.Min(backOffSlot * MinDelayInSeconds, int.MaxValue));
+                delayInSeconds = Math.Max(Math.Min(backOffDelay, MaxDelayInSeconds), MinDelayInSeconds);
+            }
+
+            return TimeSpan.FromSeconds(delayInSeconds);
+        }
+
+        protected virtual void Dispose(bool disposing)
+        {
+            if (!_disposed)
+            {
+                if (disposing)
+                {
+                    _backOffIntervalTimer?.Dispose();
+                }
+
+                _disposed = true;
+            }
+        }
+
+        public void Dispose()
+        {
+            // Do not change this code. Put cleanup code in 'Dispose(bool disposing)' method
+            Dispose(disposing: true);
+            GC.SuppressFinalize(this);
+        }
+    }
+}
diff --git a/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/tests/Azure.Monitor.OpenTelemetry.Exporter.Tests/TransmissionStateManagerTests.cs b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/tests/Azure.Monitor.OpenTelemetry.Exporter.Tests/TransmissionStateManagerTests.cs
new file mode 100644
index 000000000000..b71f44f48258
--- /dev/null
+++ b/sdk/monitor/Azure.Monitor.OpenTelemetry.Exporter/tests/Azure.Monitor.OpenTelemetry.Exporter.Tests/TransmissionStateManagerTests.cs
@@ -0,0 +1,43 @@
+// Copyright (c) Microsoft Corporation. All rights reserved.
+// Licensed under the MIT License.
+
+using System;
+using Azure.Core.TestFramework;
+using Azure.Monitor.OpenTelemetry.Exporter.Internals;
+using Xunit;
+
+namespace Azure.Monitor.OpenTelemetry.Exporter.Tests
+{
+    public class TransmissionStateManagerTests
+    {
+        [Fact]
+        public void EnableBackOffSetsStateToOpen()
+        {
+            var transmissionStateManager = new TransmissionStateManager();
+            MockResponse mockResponse = new MockResponse(500, "Internal Server Error");
+            transmissionStateManager.EnableBackOff(mockResponse);
+
+            Assert.Equal(TransmissionState.Open, transmissionStateManager.State);
+        }
+
+        [Fact]
+        public void EnableBackOffSetsStateToOpenUsingRetryAfterHeaderInResponse()
+        {
+            System.Timers.Timer backOffIntervalTimer = new();
+            var transmissionStateManager = new TransmissionStateManager(
+                random: new(),
+                minIntervalToUpdateConsecutiveErrors: TimeSpan.FromSeconds(20),
+                nextMinTimeToUpdateConsecutiveErrors: DateTimeOffset.MinValue,
+                backOffIntervalTimer: backOffIntervalTimer,
+                TransmissionState.Closed
+                );
+
+            MockResponse mockResponse = new MockResponse(429, "Internal Server Error");
+            mockResponse.AddHeader("Retry-After", "20");
+            transmissionStateManager.EnableBackOff(mockResponse);
+
+            Assert.Equal(20000, backOffIntervalTimer.Interval);
+            Assert.Equal(TransmissionState.Open, transmissionStateManager.State);
+        }
+    }
+}