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Interconnection and competition among asymmetric networks in the Internet backbone market

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  • Jahn, Eric
  • Prüfer, Jens

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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  • Jahn, Eric & Prüfer, Jens, 2008. "Interconnection and competition among asymmetric networks in the Internet backbone market," Information Economics and Policy, Elsevier, vol. 20(3), pages 243-256, September.
    • Handle: RePEc:eee:iepoli:v:20:y:2008:i:3:p:243-256
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    2. Zhou, Weihua & Pu, Yaqi & Dai, Hongyan & Jin, Qingwei, 2017. "Cooperative interconnection settlement among ISPs through NAP," European Journal of Operational Research, Elsevier, vol. 256(3), pages 991-1003.
    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. Sun Me Choi & Christian Fernando Libaque-Saenz & Sang-woo Lee & Myeong-Cheol Park, 2016. "Margin squeeze in the Internet backbone interconnection market: a case study of Korea," Telecommunication Systems: Modelling, Analysis, Design and Management, Springer, vol. 61(3), pages 531-542, March.
    5. López, Ángel Luis, 2011. "Asymmetric access pricing in the Internet backbone market," Economics Letters, Elsevier, vol. 112(1), pages 3-6, July.
    6. Zhuo, Ran & Huffaker, Bradley & claffy, kc & Greenstein, Shane, 2021. "The impact of the General Data Protection Regulation on internet interconnection," Telecommunications Policy, Elsevier, vol. 45(2).
    7. 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).
    8. Kim Soo Jin, 2020. "Direct Interconnection and Investment Incentives for Content Quality," Review of Network Economics, De Gruyter, vol. 18(3), pages 169-204, September.
    9. Christopher Decker, 2016. "Regulating networks in decline," Journal of Regulatory Economics, Springer, vol. 49(3), pages 344-370, June.
    10. Gireesh Shrimali, 2010. "Competitive resource sharing by Internet Service Providers," Netnomics, Springer, vol. 11(2), pages 149-179, July.

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    More about this item

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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