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Economics of Contractual Arrangements for Internet Interconnections
Sponsored by:
National Science Foundation (NSF)

In collaboration with Constantine Dovrolis (Georgia Tech), we will evaluate and model the currently existing framework of Internet interconnections and re-design it through an interdisciplinary techno-economic perspective.

Funding source: NSF CNS-1513847. Period of performance: October 1, 2015 - September 30, 2019.

|   Project Summary    Proposal   |

Project Summary

The Internet is an ecosystem of about 50,000 Autonomous Systems (or ASes) that operate independently and have different objectives and operational constraints. What glues the Internet together is the bilateral techno-economic agreements that form the interconnections between these ASes. The interconnections have evolved over the last 20 years or so, since the commercialization of the Internet in the mid-nineties, in a rather ad-hoc manner, 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 (e.g., balanced traffic ratios). These problems result in congested interconnections and, in some cases, unreachability problems affecting millions of Internet users.

The main premise of the proposed 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, we need to investigate thoroughly the existing limitations of the interconnection framework, and probably re-design it through an inter-disciplinary, techno-economic perspective.

The project includes three main tasks:
  • Analyze four common distinct interconnection scenarios, and 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 analytical modeling results will be complemented by computational results using the agent-based simulator GENESIS.
  • 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.
  • 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. This interconnection framework should provide the right incentives for all relevant Internet firms to continue to invest sufficient resources into Internet infrastructure. The design of the new interconnection framework will be guided by the modeling and empirical results of the first two Tasks.

Project Management Plan

We have developed the following timeline to achieve our goals. All investigators will participate in tackling every research problem, with at least one graduate research assistant and one PI designated as the "lead" for each problem.

Goal TypeTask DescriptionLead
Year 1
ModelingEconomic analysis of the access monopoly and access duopoly interconnection scenariosGeorgia Tech
ComputationalNumerical/simulation results for the previous two economic modelsGeorgia Tech
ArchitecturalDesign of proposed interconnection frameworkGeorgia Tech
EmpiricalMining Comcast dataset to evaluate demand elasticity for broadband subscribers and enterprise customers CAIDA
Year 2
ModelingEconomic analysis of the simple access-transit-content interconnection scenarioGeorgia Tech
ComputationalNumerical/simulation results for the previous economic modelGeorgia Tech
Architectural/ModelingDeveloping method to compute optimal prices for the proposed interconnection frameworkGeorgia Tech
EmpiricalMining Comcast data to evaluate the sensitivity of demand to congestion, as well as traffic growth patterns. Estimating parameters for the previously developed economic models.CAIDA
Year 3
ModelingEconomic analysis of the meshed access-transit-content interconnection scenarioGeorgia Tech
ComputationalNumerical/simulation results for the previous economic modelGeorgia Tech
Architectural/ComputationalGENESIS simulations of the proposed interconnection framework and design revisions to evaluate.Georgia Tech
EmpiricalMining BGP, PeeringDB, and IXP data for the density of interdomain interconnections, colocation and peering patterns, and the location of interdomain congestion. Estimating parameters for the meshed access-transit-content interconnection scenarioCAIDA
Year 4
ModelingEconomic analysis of proposed interconnection frameworkGeorgia Tech
ComputationalInternet-scale GENESIS simulations of proposed interconnection framework with focus on implications for topological density and performanceGeorgia Tech
Architectural/EmpiricalInvestigation of practical and deployment issues of the proposed interconnection frameworkCAIDA
  Last Modified: Mon Nov-2-2015 10:27:55 PST
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