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The Internet Market For Quality

Author

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  • Dennis WELLER

    (Navigant Economics, Chicago, USA)

Abstract

The market for the exchange of traffic among networks on the Internet has proved to be remarkably efficient and adaptable.While the issue of network neutrality has dominated policy debates in recent years, the evolution of this market has begun to provide answers to many of the questions raised in these debates.It is establishing the terms under which content will be exchanged among networks and delivered to end users, how traffic will be routed and resources will be deployed to ensure quality of service, and by whom. Underlying changes in consumer demand and industry structure are driving this evolution in the market for Internet traffic exchange, forcing each of the players in the system - including content providers, content delivery networks, and local access networks - to adapt. Even as the terms of peering and transit agreements have become so well understood and accepted that the vast majority of such agreements can be adopted on a handshake basis, without even a written document, parties have also produced new variations on this model to establish terms for the delivery of large volumes of video traffic. While this process may be messy at times, as indicated by the disputes that have arisen over the last year, the performance of this market has so far been quite good. It may therefore be wise for regulatory authorities, having established broad parameters for policy toward net neutrality, to allow the development of the market to continue without intervention, while monitoring its progress.

Suggested Citation

  • Dennis WELLER, 2011. "The Internet Market For Quality," Communications & Strategies, IDATE, Com&Strat dept., vol. 1(84), pages 35-53, 4th quart.
  • Handle: RePEc:idt:journl:cs8402
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    More about this item

    Keywords

    Internet; peering; network neutrality; traffic exchange; CDN.;

    JEL classification:

    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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