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Multihoming, content delivery networks, and the market for Internet connectivity


  • Hau, Thorsten
  • Burghardt, Dirk
  • Brenner, Walter


Peering points between different Internet service providers (ISPs) are among the bottlenecks of the Internet. Multihoming (MH) and content delivery networks (CDNs) are two technical solutions to bypass peering points and to improve the quality of data delivery. So far, however, there is no research that analyzes the economic effects of MH and CDNs on the market for Internet connectivity. This paper develops a static market model with locked-in end users and paid content. It shows that MH and CDNs create the possibility for terminating ISPs to engage in monopolistic pricing towards content providers, leading to a shift of rents from end users and content providers to ISPs. Implications for future innovations are discussed.

Suggested Citation

  • Hau, Thorsten & Burghardt, Dirk & Brenner, Walter, 2011. "Multihoming, content delivery networks, and the market for Internet connectivity," Telecommunications Policy, Elsevier, vol. 35(6), pages 532-542, July.
  • Handle: RePEc:eee:telpol:v:35:y:2011:i:6:p:532-542

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    References listed on IDEAS

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    5. Laffont, Jean-Jacques & Marcus, Scott & Rey, Patrick & Tirole, Jean, 2003. " Internet Interconnection and the Off-Net-Cost Pricing Principle," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 370-390, Summer.
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    Cited by:

    1. Zhang, Nan & Levä, Tapio & Hämmäinen, Heikki, 2014. "Value networks and two-sided markets of Internet content delivery," Telecommunications Policy, Elsevier, vol. 38(5), pages 460-472.


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