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Investigating the Role of a Transmission Initiator in Private Peering Arrangements

Author

Listed:
  • Ruzana Davoyan

    ()

  • Jorn Altmann

    () (Technology Management, Economics, and Policy Program (TEMEP), Seoul National University)

Abstract

This paper investigates the impact of determination of an original initiator of transmission on demand as well as profits of the providers. For that purpose we present a new model, called differentiated traffic-based interconnection agreement (DTIA) that differentiates traffic into two types, referred to as native and stranger in order to determine a transmission initiator. In comparison to the existing financial settlement, under which the payments are based on the net traffic flow, the proposed model governs cost compensation according to the differentiated traffic flows. In addition, a traffic management mechanism that supports the presented approach was described. Analytical studies were provided using Nash bargaining solution to explore how the proposed strategy affects the outcome of providers¡¯ negotiation. The key consequence of the obtained results showed that determination of an initiator of transmission induces providers to receive higher profits.

Suggested Citation

  • Ruzana Davoyan & Jorn Altmann, 2010. "Investigating the Role of a Transmission Initiator in Private Peering Arrangements," TEMEP Discussion Papers 201043, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jan 2010.
    • Handle: RePEc:snv:dp2009:201043
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    File URL: ftp://147.46.237.98/DP-43.pdf
    File Function: First version, 2010
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    References listed on IDEAS

    as
    1. Armstrong, Mark, 2001. "The theory of access pricing and interconnection," MPRA Paper 15608, University Library of Munich, Germany.
    2. Yoon Kiho, 2006. "Interconnection Economics of All-IP Networks," Review of Network Economics, De Gruyter, vol. 5(3), pages 1-15, September.
    3. Michael Carter & Julian Wright, 1999. "Interconnection in Network Industries," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 14(1), pages 1-25, February.
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    Cited by:

    1. Ruzana Davoyan & Jorn Altmann & Wolfgang Effelsberg, 2010. "Exploring the Effect of Traffic Differentiation on Interconnection Cost Sharing," TEMEP Discussion Papers 201042, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jan 2010.
    2. Ruzana Davoyan & Jorn Altmann & Wolfgang Effelsberg, 2010. "Intercarrier Compensation in Unilateral and Bilateral Arrangements," TEMEP Discussion Papers 201041, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jan 2010.

    More about this item

    Keywords

    ISP interconnection; peering agreements; transit agreements; charging; pricing; game theory; network Provider;

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
    • C70 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - General
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications
    • M15 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - IT Management
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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