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Interconnection and Competition Among Asymmetric Networks in the Internet Backbone Market

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Author Info

  • Jahn, E.
  • Prüfer, J.

    (Tilburg University, Center for Economic Research)

Abstract

We examine the interrelation between interconnection and competition in the internet backbone market.Networks asymmetric in size choose among different interconnection regimes and compete for end-users.We show that a direct interconnection regime, Peering, softens competition compared to indirect interconnection since asymmetries become less influential when networks peer.If interconnection fees are paid, the smaller network pays the larger one. Sufficiently symmetric networks enter a Peering agreement while others use an intermediary network for exchanging traffic.This is in line with considerations of a non-US policy maker.In contrast, US policy makers prefer Peerings among relatively asymmetric networks.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2006-122.

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Date of creation: 2006
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Handle: RePEc:dgr:kubcen:2006122

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Web page: http://center.uvt.nl

Related research

Keywords: Internet Backbone; Endogenous Network Interconnection; Asymmetric Networks; Two-Way Access Pricing;

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  1. Laffont, Jean-Jacques & Marcus, Scott & Rey, Patrick & Tirole, Jean, 2003. "Internet Interconnection and the Off-Net-Cost Pricing Principle," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
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  7. Giovannetti, Emanuele & Ristuccia, Cristiano Andrea, 2005. "Estimating market power in the Internet backbone. Using the IP transit Band-X database," Telecommunications Policy, Elsevier, vol. 29(4), pages 269-284, May.
  8. Foros, Oystein & Hansen, Bjorn, 2001. "Competition and compatibility among Internet Service Providers," Information Economics and Policy, Elsevier, vol. 13(4), pages 411-425, December.
  9. Giovannetti, E., 2000. "Interconnection, Differentiation and Bottlenecks in the Internet," Cambridge Working Papers in Economics 0011, Faculty of Economics, University of Cambridge.
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  11. Peitz, Martin, 2005. "Asymmetric access price regulation in telecommunications markets," European Economic Review, Elsevier, vol. 49(2), pages 341-358, February.
  12. Armstrong, Mark, 1998. "Network Interconnection in Telecommunications," Economic Journal, Royal Economic Society, vol. 108(448), pages 545-64, May.
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Citations

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Cited by:
  1. Le Cadre, Hélène & Barth, Dominique & Pouyllau, Hélia, 2011. "QoS commitment between vertically integrated autonomous systems," European Journal of Operational Research, Elsevier, vol. 214(3), pages 627-643, November.
  2. Wulf, Jochen & Limbach, Felix & Zarnekow, Rüdiger, 2010. "Analysis of QoS Platform Cooperation Strategies," 21st European Regional ITS Conference, Copenhagen 2010: Telecommunications at new crossroads - Changing value configurations, user roles, and regulation 39, International Telecommunications Society (ITS).
  3. López, Ángel Luis, 2011. "Asymmetric access pricing in the Internet backbone market," Economics Letters, Elsevier, vol. 112(1), pages 3-6, July.
  4. Gireesh Shrimali, 2010. "Competitive resource sharing by Internet Service Providers," Netnomics, Springer, vol. 11(2), pages 149-179, July.

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