A stackelberg game based analysis for interactions among Internet service provider, content provider, and advertisers

It has been a long demand of Internet Service Providers (ISPs) that the Content Providers (CPs) share their profits for investments in network infrastructure. In this paper, we study profit sharing contracts between a CP with multiple ISPs. Each ISP commits to improving the Quality of Service (QoS) for the end-users through higher investments efforts. The CP agrees to share the profits due to the resulting higher demand for its content. We first model non-cooperative interaction between the CP and the ISPs as a two-stage Stackelberg game. CP is the leader that decides what fraction of its profits will be shared with the ISPs. Each ISP then simultaneously decides the amount of effort (investment) to enhance network quality. Here, CP cannot observe individual effort by the ISPs, which poses a challenge for the CP to decide how to share the profits with each ISP. Therefore, we also investigate a cooperative scenario, where the CP only decides the total share it gives to the ISPs, and each ISP then cooperatively shares the profit among themselves. We study the effect of such cooperation between the ISPs by building a Nash Bargaining based model. We show that the collaboration improves total effort by the ISPs and the payoff of the CP.

With the popularity of smart devices such as smartphones, tablets, contents that traditionally be viewed on a personal computer, can also be viewed on these smart devices. The demand for contents thus is increasing year by year, which makes the content providers (CPs) get high revenue from either users' subscription or advertisement. On the other hand, Internet service providers (ISPs), who keep investing in the network technology or capacity to support the huge traffic generated by contents, do not benefit directly from the content traffic. One choice for ISPs is to charge CPs to share the revenue from the huge content traffic. Then ISPs will have enough incentives to invest in network infrastructure to improve quality of services (QoS), which eventually benefit CPs and users. This paper presents a novel economic model called Stackelberg-Bertrand game to capture the interaction and competitions among ISPs, CPs and users when ISPs charge CPs. A generic user demand function is assumed to capture the sensitivity of demand to prices of ISPs and CPs. The numerical results show that the price elasticity of ISP and CP plays an important part on the payoff of the ISP and CP.

Data traffic demand over the Internet is increasing rapidly, and it is changing the pricing model between Internet service providers (ISPs), content providers (CPs) and end users. One recent pricing proposal is sponsored data plan, i.e., when accessing contents from a particular CP, end users do not need to pay for that volume of traffic consumed, but the CP will sponsor for this data consumption. In this paper, our goal is to understand the rationale behind this new pricing model, as well as its impacts to the wireless data market, in particular, who will benefit and who will be hurt from this scheme. We build a two-class service model to analyze the consumers' traffic demand under the sponsored data plan with consideration of QoS. We use a two-stage Stackelberg game to characterize the interaction between CPs and the ISP and reveal a number of important findings. Our conclusions include: 1) When the ISP's capacity is sufficient, the sponsored data plan benefits consumers and CPs in the short run, but the ISP does not have incentives to further improve its service in the long run. 2) When ISP's capacity is insufficient, the ISP and end users may achieve a win- win trade, while the ISP and CPs always compete for the revenue. 3) The sponsored data plan may enlarge the un- balance in revenue distribution between different CPs; CPs with higher unit income and poorer technology support are more likely to prefer the sponsored data plan.

Data traffic demand over the Internet is increasing rapidly, and it is changing the pricing model between Internet service providers (ISPs), content providers (CPs) and end users. One recent pricing proposal is sponsored data plan, i.e., when accessing contents from a particular CP, end users do not need to pay for that volume of traffic consumed, but the CP will sponsor for this data consumption. In this paper, our goal is to understand the rationale behind this new pricing model, as well as its impacts to the wireless data market, in particular, who will benefit and who will be hurt from this scheme. We build a two-class service model to analyze the consumers' traffic demand under the sponsored data plan with consideration of QoS. We use a two-stage Stackelberg game to characterize the interaction between CPs and the ISP and reveal a number of important findings. Our conclusions include: 1) When the ISP's capacity is sufficient, the sponsored data plan benefits consumers and CPs in the short run, but the ISP does not have incentives to further improve its service in the long run. 2) When ISP's capacity is insufficient, the ISP and end users may achieve a win- win trade, while the ISP and CPs always compete for the revenue. 3) The sponsored data plan may enlarge the un- balance in revenue distribution between different CPs; CPs with higher unit income and poorer technology support are more likely to prefer the sponsored data plan.

The ongoing net neutrality debate has generated a lot of heated discussions on whether or not monetary interactions should be regulated between content and access providers. Among the several topics discussed, ‘differential pricing’ has recently received attention due to ‘zero-rating’ platforms proposed by some service providers. In the differential pricing scheme, Internet Service Providers (ISPs) can exempt data access charges for on content from certain CPs (zero-rated) while no exemption is on content from other CPs. This allows the possibility for Content Providers (CPs) to make ‘sponsorship’ agreements to zero-rate their content and attract more user traffic. In this article, we study the effect of differential pricing on various players in the Internet. We first consider a model with a monopolistic ISP and multiple CPs where users select CPs based on the quality of service (QoS) and data access charges. We show that in a differential pricing regime 1) it is possible for a CP to obtain higher utility than a CP offering better QoS through higher subsidy at user equilibrium 2) Overall QoS (mean delay) for end users can degrade under differential pricing schemes. In the oligopolistic market with multiple ISPs, ISPs tend to set equal access prices at equilibrium and similar conclusions are derived as in the monopolistic market.

This paper develops a game theoretic model based on a two-sided market framework to investigate the net neutrality debate. In particular, we consider investment incentives of Internet Service Providers (ISPs) under a neutral and non-neutral network regimes. In our model, two interconnected ISPs compete over quality and prices for heterogeneous content providers (CPs) and heterogeneous consumers. We consider two definitions of a non-neutral network: in the first, ISPs charge access fees to off-network CPs; in the second, ISPs offer priority lanes''. In the neutral regime, connecting to a single ISP allows a CP to communicate with all consumers and all CPs obtain the same quality of service. With a combination of theoretical and numerical results we find that under both definitions ISPs' quality-investment levels are driven by the trade-off they make between softening price competition on the consumer side and increasing revenues extracted from CPs. Specifically, in the non-neutral regime, because it is easier to extract surplus through appropriate CP pricing, ISPs' investment levels are larger. Because CP quality is enhanced by the quality of ISPs, larger investment levels imply that CPs' revenues increase. Similarly, consumer surplus increases as well. The main insight resulting from our model is that social welfare is larger in the non-neutral regime. Our results highlight important mechanisms related to ISPs' investments that play a key role in market outcomes, providing useful insights that enrich the net neutrality debate.

Revenue sharing on the Internet: A case for going soft on neutrality regulations

Revenue sharing contracts between Content Providers (CPs) and Internet Service Providers (ISPs) can act as leverage for enhancing the infrastructure of the Internet. ISPs can be incentivised to make investments in network infrastructure that improve Quality of Service (QoS) for users if attractive contracts are negotiated between them and CPs. The idea here is that part of the revenue of CPs is shared with ISPs to invest in infrastructure improvement. We propose a model in which CPs (leaders) determine contracts, and an ISP (follower) reacts by strategically determining the infrastructure enhancement (effort) for each CP. Two cases are studied: (i) the ISP differentiates between the CPs and puts (potentially) a different level of efforts to improve the QoS of each CP, and (ii) the ISP does not differentiate between CPs and makes equal amount of effort for all the CPs. The last scenario can be viewed as neutral behavior by the ISP. Our analysis of optimal contracts shows that preference of CPs for the neutral and non-neutral regime depends on their monetizing power - CPs which can better monetize their demand tend to prefer non-neutral regime whereas the weaker CPs tend to prefer the neutral regime. Interestingly, ISP revenue, as well as social utility, are also found to be higher under the non-neutral regime. We then propose an intermediate regulatory regime that we call "soft-neutral", where efforts put by the ISP for all the CPs need not be equal same but the disparity is not wide. We show that the soft-neutral regime alleviates the loss in social utility in the neutral regime and the outcome further improves when CPs determine their contracts through bargaining.

Network neutrality is the topic of a vivid and very sensitive debate, in both the telecommunication and political worlds, because of its potential impact in everyday life. That debate has been raised by Internet Service Providers (ISPs), complaining that content providers (CPs) congest the network with insufficient monetary compensation, and threatening to impose side payments to CPs in order to support their infrastructure costs. While there have been many studies discussing the advantages and drawbacks of neutrality, there is no game-theoretical work dealing with the observable situation of competitive ISPs in front of a (quasi-)monopolistic CP. Though, this is a typical situation that is condemned by ISPs, and, according to them, another reason of the non-neutrality need. We develop and analyze here a model describing the relations between two competitive ISPs and a single CP, played as a three-level game corresponding to three different time scales. At the largest time scale, side payments (if any) are determined. At a smaller time scale, ISPs decide their (flat-rate) subscription fee (toward users), then the CP chooses the (flat-rate) price to charge users. Users finally select their ISP (if any) using a price-based discrete choice model, and decide whether to also subscribe to the CP service. The game is analyzed by backward induction. As a conclusion, we obtain among other things that non-neutrality may be beneficial to the CP, and not necessarily to ISPs, unless the side payments are decided by ISPs.

The use of content delivery services in which users pay a fee for each content delivery to the content provider (CP) is dramatically increasing. For Internet service providers (ISPs), the increased investment cost required to maintain stable quality for delivering rich content is a serious problem, and ISPs need to recover this cost from CPs because it is difficult to do so by increasing fees to users. However, CPs usually pay a transit fee in which the increase ratio diminishes as the volume of transmitted data increases, so the revenue collected by the ISPs is not sufficient to cover their investment cost. To address this problem, a content charge in which ISPs charge a fee for each content delivery to CPs would seem to be effective. However, it is anticipated that CPs will switch to another ISP if an ISP introduces a content charge, so introducing a content charge may not always increase the revenue of ISPs. Assuming a competitive environment of two ISPs in which one ISP introduces a content charge and each ISP can freely set its charging parameter, this paper models the relationship among CPs and two ISPs using a three-stage Stackelberg game and investigates the effect of a content charge by ISPs on the revenue of each player.

As content delivered on the Internet becomes richer, the use of content delivery services in which users pay a fee for each content delivery to the content provider (CP) increases. For Internet service providers (ISPs), on the other hand, the increased investment cost required to maintain stable quality is a problem, and ISPs need to recover this cost from CPs because it is difficult to do so by increasing fees to users. However, CPs usually pay an access fee whose increase ratio diminishes as the volume of transmitted data increases, so the profit obtained by the ISPs is not sufficient to cover their investment cost. To address this problem, a content charge in which ISPs charge a fee for each content delivery to CPs would seem to be effective. However, it is anticipated that CPs will switch to another ISP if the original ISP introduces a content charge, so introducing a content charge may not always increase the revenue of ISPs. This paper investigates the feasibility of adding a content charge by ISPs and evaluates the effect such a charge would have by modeling the relationship between CPs and ISPs using a two-stage Stackelberg game.

The content distributed networks (CDNs) have been extending their market coverage on the conventional Internet environment by providing better quality of service (QoS) to the consumers. We consider the CDN as an economic player that competes with transit service provider (TSP), and model it as a platform that mediates content providers (CPs) and Internet service providers (ISPs) that make an independent decision on their participation to the CDN. Given the information about CPs and ISPs, the CDN can maximize its revenue by optimizing the prices at the both sides. This problem can be formulated as a combinatorial optimization problem. However, all possible combinations of participating CPs and ISPs should be considered, which require intensive computation, in particular, under CP dynamics where CPs arrive and depart the market over time. In this work, we develop a low-complexity pricing scheme that aims to find close-to-optimal prices.

<p>In this work, we present an economic model of computer networks that describes the in-teraction between Internet Service Providers (ISP ), customers and content provider. The competition between ISP s may be translated by the prices they require and the qualities of service (QoS) they offer. The customer demand for service from an ISP does not only de-pend on the price and quality of service (QoS) of the ISP , but it is influenced by all those offered by its competitors. This behavior has been extensively analyzed using game the-ory as a decision support tool. We interpret a non-neutral network when a content provider privileges ISP s by offering them more bandwidth to ensure proper QoS to support ap-plications that require more data transport capacity (voice over internet protocol (V OIP ) the live video streaming, online gaming). In addition, our work focuses on the price game analysis and QoS between ISP s in two cases: neutral network and non-neutral network. After showing the existence and uniqueness of equilibrium in terms of quality of service, we analyzed the impact of net neutrality on competition between ISP s. We also validated our theoretical study with numerical results, which show that the game has an equilibrium point which depends on all the parameters of the system.</p>

Sponsored data: A game-theoretic model with consumer multihoming behaviour

We consider the relationship of Internet service providers (ISP) and content service providers (CP) in the Internet ecosystem. Currently, the position of ISPs is challenged by the emergence of powerful content service providers, especially with the spreading of bandwidth-demanding video services. The further investment in the network capacity may be hindered by prevailing business models that largely exclude the ISPs from sharing in the major cash flows resulting from content provision. We develop modeling tools for evaluation of business models of ISPs and present results of an analysis of two models with the potential for the generation of additional cash flows for ISP: paid content peering and service differentiation. Firstly, we show that under certain conditions on the cost structure and the level of demand elasticity and uncertainty, it can be profitable for a powerful content provider to resort to paid content peering, thus transferring to the ISP a part of his content provision revenue. The resulting business model may provide substantial benefits to all major participants in this ecosystem: network providers, content and service providers and end users. After this we consider competition in the Internet provision sector and show that - also in this case - the paid content peering can help ISPs to expand the network capacity and at the same time increase profits of content providers. The end users benefit from the lower prices for content services. Finally, we consider the situation when an ISP differentiates the service offer by engaging in content provision, thus entering in direct competition with content providers.