IDEAS home Printed from https://ideas.repec.org/a/kap/netnom/v15y2014i3p155-182.html
   My bibliography  Save this article

Network neutrality debate and ISP inter-relations: traffic exchange, revenue sharing, and disconnection threat

Author

Listed:
  • Pierre Coucheney
  • Patrick Maillé
  • Bruno Tuffin

Abstract

The network neutrality debate originally stems from the growing traffic asymmetry between ISPs, questioning the established peering or transit agreements. That tendency is due to popular content providers connected to the network through a single ISP whose traffic is not charged by distant ISPs. We propose in this paper to review the economic transit agreements between ISPs in order to determine their best strategy. We define a model with two ISPs, each providing direct connectivity to a fixed proportion of the content and competing in terms of price for end users, who select their ISP based on the price per unit of available content. We analyze and compare thanks to game-theoretic tools three different situations: the case of peering between the ISPs, the case where ISPs do not share their traffic (exclusivity arrangements), and the case where they fix a transfer price per unit of volume. Our results suggest that a minimal regulation, consisting in letting ISPs choose transit prices but imposing peering in case no agreement is reached, leads to satisfying outcomes in terms of user welfare while still leaving some decision space to ISPs, hence answering a concern they have regarding regulation in the Internet market. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Pierre Coucheney & Patrick Maillé & Bruno Tuffin, 2014. "Network neutrality debate and ISP inter-relations: traffic exchange, revenue sharing, and disconnection threat," Netnomics, Springer, vol. 15(3), pages 155-182, November.
    • Handle: RePEc:kap:netnom:v:15:y:2014:i:3:p:155-182
    DOI: 10.1007/s11066-014-9090-3
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11066-014-9090-3
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s11066-014-9090-3?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Nash, John, 1953. "Two-Person Cooperative Games," Econometrica, Econometric Society, vol. 21(1), pages 128-140, April.
    2. Marc Bourreau & Frago Kourandi & Tommaso Valletti, 2015. "Net Neutrality with Competing Internet Platforms," Journal of Industrial Economics, Wiley Blackwell, vol. 63(1), pages 30-73, March.
    3. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    4. Economides, Nicholas & Tåg, Joacim, 2012. "Network neutrality on the Internet: A two-sided market analysis," Information Economics and Policy, Elsevier, vol. 24(2), pages 91-104.
    5. Foros, Oystein & Hansen, Bjorn, 2001. "Competition and compatibility among Internet Service Providers," Information Economics and Policy, Elsevier, vol. 13(4), pages 411-425, December.
    6. Musacchio John & Schwartz Galina & Walrand Jean, 2009. "A Two-Sided Market Analysis of Provider Investment Incentives with an Application to the Net-Neutrality Issue," Review of Network Economics, De Gruyter, vol. 8(1), pages 1-18, March.
    7. François Boussion & Patrick Maillé & Bruno Tuffin, 2012. "Net Neutrality Debate: Impact of Competition among ISPs," Post-Print hal-00725489, HAL.
    8. Frago Kourandi & Jan Krämer & Tommaso Valletti, 2015. "Net Neutrality, Exclusivity Contracts, and Internet Fragmentation," Information Systems Research, INFORMS, vol. 26(2), pages 320-338, June.
    9. Krämer, Jan & Wiewiorra, Lukas & Weinhardt, Christof, 2013. "Net neutrality: A progress report," Telecommunications Policy, Elsevier, vol. 37(9), pages 794-813.
    10. Martin J. Osborne & Ariel Rubinstein, 1994. "A Course in Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262650401, December.
    11. Maillé,Patrick & Tuffin,Bruno, 2014. "Telecommunication Network Economics," Cambridge Books, Cambridge University Press, number 9781107032750.
    12. Stanley Besen, 2001. "Advances in Routing Technologies and Internet Peering Agreements," American Economic Review, American Economic Association, vol. 91(2), pages 292-296, May.
    13. Mark Armstrong Author-Email: mark.armstrong@ucl.ac.uk Author-Workplace-Name: University College of London, 2006. "Competition in Two-Sided Markets," RAND Journal of Economics, The RAND Corporation, vol. 37(3), pages 668-691, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Robert F. Easley & Hong Guo & Jan Krämer, 2018. "Research Commentary—From Net Neutrality to Data Neutrality: A Techno-Economic Framework and Research Agenda," Information Systems Research, INFORMS, vol. 29(2), pages 253-272, June.
    2. Vogelsang Ingo, 2018. "Net Neutrality Regulation: Much Ado about Nothing?," Review of Network Economics, De Gruyter, vol. 17(3), pages 225-243, September.
    3. Payam Hanafizadeh & Parastou Hatami & Erik Bohlin, 2019. "Business models of Internet service providers," Netnomics, Springer, vol. 20(1), pages 55-99, April.
    4. Payam Hanafizadeh & Parastou Hatami & Morteza Analoui & Amir Albadvi, 2021. "Business model innovation driven by the internet of things technology, in internet service providers’ business context," Information Systems and e-Business Management, Springer, vol. 19(4), pages 1175-1243, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Vogelsang Ingo, 2013. "The Endgame of Telecommunications Policy? A Survey," Review of Economics, De Gruyter, vol. 64(3), pages 193-270, December.
    2. D'Annunzio, Anna & Russo, Antonio, 2015. "Net Neutrality and internet fragmentation: The role of online advertising," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 30-47.
    3. Alexei A. Gaivoronski & Per Jonny Nesse & Olai Bendik Erdal, 2017. "Internet service provision and content services: paid peering and competition between internet providers," Netnomics, Springer, vol. 18(1), pages 43-79, May.
    4. Briglauer, Wolfgang & Stocker, Volker & Stockhammer, Paul, 2019. "Ist Netzneutralität tatsächlich gut? Eine Neubewertung vor dem Hintergrund der Regulierung in den USA und in der EU sowie aktueller Forschungsergebnisse," Policy Notes 38, EcoAustria – Institute for Economic Research.
    5. Marc Bourreau & Romain Lestage, 2019. "Net neutrality and asymmetric platform competition," Journal of Regulatory Economics, Springer, vol. 55(2), pages 140-171, April.
    6. Anna D'Annunzio & Antonio Russo, 2013. "Network Neutrality, Access to Content and Online Advertising," DIAG Technical Reports 2013-09, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    7. Nielsen, Martin, 2015. "Strategic Investment Dependence and Net Neutrality," Discussion Papers on Economics 11/2015, University of Southern Denmark, Department of Economics.
    8. Reggiani, Carlo & Valletti, Tommaso, 2016. "Net neutrality and innovation at the core and at the edge," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 16-27.
    9. Nicholas Economides, 2015. "Economic Features of the Internet and Network Neutrality," Working Papers 15-01, NET Institute.
    10. Njoroge Paul & Ozdaglar Asuman & Stier-Moses Nicolás E. & Weintraub Gabriel Y., 2014. "Investment in Two-Sided Markets and the Net Neutrality Debate," Review of Network Economics, De Gruyter, vol. 12(4), pages 355-402, February.
    11. Gautier, Axel & Somogyi, Robert, 2020. "Prioritization vs zero-rating: Discrimination on the internet," International Journal of Industrial Organization, Elsevier, vol. 73(C).
    12. Calzada, Joan & Tselekounis, Markos, 2018. "Net Neutrality in a hyperlinked Internet economy," International Journal of Industrial Organization, Elsevier, vol. 59(C), pages 190-221.
    13. Baake, Pio & Sudaric, Slobodan, 2018. "Net Neutrality, Prioritization and the Impact of Content Delivery Networks," Rationality and Competition Discussion Paper Series 102, CRC TRR 190 Rationality and Competition.
    14. Shane Greenstein & Martin Peitz & Tommaso Valletti, 2016. "Net Neutrality: A Fast Lane to Understanding the Trade-Offs," Journal of Economic Perspectives, American Economic Association, vol. 30(2), pages 127-150, Spring.
    15. D׳Annunzio, Anna & Reverberi, Pierfrancesco, 2016. "Co-investment in ultra-fast broadband access networks: Is there a role for content providers?," Telecommunications Policy, Elsevier, vol. 40(4), pages 353-367.
    16. Wolfgang Briglauer & Carlo Cambini & Klaus Gugler & Volker Stocker, 2023. "Net neutrality and high-speed broadband networks: evidence from OECD countries," European Journal of Law and Economics, Springer, vol. 55(3), pages 533-571, June.
    17. Anna D'Annunzio & Pierfrancesco Reverberi, 2015. "Content providers and co-investment in broadband networks," DIAG Technical Reports 2015-05, Department of Computer, Control and Management Engineering, Universita' degli Studi di Roma "La Sapienza".
    18. Isabel Amigo & Pablo Belzarena & Sandrine Vaton, 2013. "A pricing scheme for QoS in overlay networks based on first-price auctions and reimbursement," Netnomics, Springer, vol. 14(1), pages 69-93, November.
    19. Briglauer, Wolfgang & Cambini, Carlo & Gugler, Klaus & Stocker, Volker, 2021. "Net Neutrality and High Speed Broadband Networks: Evidence from OECD Countries," 23rd ITS Biennial Conference, Online Conference / Gothenburg 2021. Digital societies and industrial transformations: Policies, markets, and technologies in a post-Covid world 238012, International Telecommunications Society (ITS).
    20. Krämer, Jan & Wiewiorra, Lukas & Weinhardt, Christof, 2013. "Net neutrality: A progress report," Telecommunications Policy, Elsevier, vol. 37(9), pages 794-813.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:netnom:v:15:y:2014:i:3:p:155-182. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.