Routing Money, Not Packets: A Tutorial on Internet Economics

Abstract

is tutorial is in the broad area of Internet Economics, specifically applying ideas from game theory, both Cooperative and Non-Cooperative. We consider the origins of the Internet architecture, and the evolution of the Internet ecosystem from a protocol and application standpoint. We next look at the evolution of the pricing structure on the Internet along three different dimensions: (a) between ISPs, (b) between ISPs and content providers, and (c) between ISPs and end users. We present mathematical models describing the pricing structures in each dimension, the interaction between the three and competition amongst the entities leading to the notion of Network Neutrality. We look at various definitions of Network Neutrality and analyze the the impact of mechanisms like paid peering, zero rating and differential pricing on the principle of Network Neutrality.