Network Non-neutrality Debate: An Economic Analysis

TL;DR

This paper analyzes the economic utilities and QoS implications of non-neutral Internet markets, focusing on how different revenue models of content providers influence the interactions and outcomes between ISPs and CPs.

Contribution

It introduces new models for two-sided markets involving ISPs and CPs with different revenue schemes, analyzing their strategic interactions and effects on utilities and QoS.

Findings

Revenue models significantly affect utilities and QoS.

Side payments can improve or impair CP investments depending on the revenue model.

Advertisement-based CPs are hindered by side payments in content investment.

Abstract

This paper studies the economic utilities and the quality of service (QoS) in a two-sided non-neutral market where Internet service providers (ISPs) charge content providers (CPs) for the content delivery. We propose new models on a two-sided market which involves a CP, an ISP, end users and advertisers. The CP may have either the subscription revenue model (charging end users) or the advertisement revenue model (charging advertisers). We formulate the interactions between the ISP and the CP as a noncooperative game problem for the former and an optimization problem for the latter. Our analysis shows that the revenue model of the CP plays a significant role in a non-neutral Internet. With the subscription model, both the ISP and the CP receive better (or worse) utilities as well as QoS in the presence of side payment at the same time. However, with the advertisement model, the side payment impedes the CP from investing on its contents.