NeTS: Medium: Collaborative Research: Economics of contractual arrangements for Internet interconnections

Georgia Tech Research Corporation, Atlanta GA

Investigators

Abstract

The Internet is an ecosystem of about 50,000 Autonomous Systems (ASes) that operate independently, having different objectives and operational constraints. What glues the Internet together is the bilateral techno-economic agreements that form the interconnections between these ASes. These interconnections have evolved in a rather ad-hoc manner over the last 20 years or so, since the commercialization of the Internet in the mid-nineties, often resulting in bilateral or multilateral disputes about who should peer with whom, whether one of the two parties should pay the other, and about the conditions that an interconnection should satisfy. These problems result in congested interconnections and, in some cases, unreachability problems that can affect millions of Internet users. The main premise of this research is that the currently deployed framework of Internet interconnection has fundamental weaknesses and systemic problems that inevitably will continue causing peering disputes between ASes. Instead of looking at each peering conflict as an isolated incident, this project investigates thoroughly the limitations of the interconnection framework that is currently in place. The research objectives of this project are three-fold. First, to analyze four common distinct interconnection scenarios, and to investigate their limitations under a general but realistic modeling framework. These scenarios cover the cases of monopoly and oligopoly in the Internet access market, as well as the possibility of one or more transit providers in the path between access and content providers. The modeling framework is based on recent developments in economics such as the framework of two-sided markets and the theory of incomplete contracts. The second objective is to analyze data provided by Comcast and other sources to estimate the key parameters of the previous economic models and validate their predictions. These parameters include the elasticity of demand for Internet traffic at the access and transit markets, the sensitivity of the demand to congestion, and the traffic growth rate for different Internet service plans. The third objective is to develop a new techno-economic interconnection framework that can provide a broader and more economically efficient set of interdomain relations than just transit and settlement-free peering. The proposed interconnection framework should also provide the right incentives so that all relevant Internet firms continue to invest sufficient resources to Internet infrastructure. The design of the new interconnection framework will be guided by the modeling and empirical results of the first two research objectives. The educational activities for this project will enhance undergraduate, graduate and professional education with concepts that lie at the intersection of networking, game theory, economics, and techno-economic agent-based modeling. Outreach activities will disseminate the results of this project to operator communities, regulator bodies and related techno-economic forums.