The contents of this legacy page are no longer maintained nor supported, and are made available only for historical purposes.

Interconnection Economics

From 2010-2013, CAIDA performed a study of the economics of Internet interconnection, supported by the NSF grant CNS-1017064, "NetSE-Econ: The economics of transit and peering interconnections in the Internet".

Impact Report

Despite much recent interest in economic aspects of the Internet, such as network interconnection (peering), pricing, performance, and the profitability of various network types, two historical developments contribute to a persistent disconnect between economic models and actual operational practices on the Internet. First, the Internet became too complex -- in traffic dynamics, topology, and economics -- for currently available analytical tools to allow realistic modeling. Second, the data needed to parameterize more realistic models -- interdomain traffic characteristics, routing and peering policies and pricing/cost structures -- has simply not been available. The problem is fundamental, and familiar: simple models have limited validity, and complex models cannot be validated. In this research project we made significant progress towards two goals: creating more powerful, empirically parameterized computational tools, and enabling broader validation than previously possible.

This research comprised a combination of measurement and modeling techniques. We conducted measurement studies of the evolution of the Internet topology at the AS-level, revealing important overall trends in the Internet AS topology (growth, rewiring, and densification), geographical differences, and topology dynamics associated with different types of players (content, transit and enterprise networks). From flow-level traffic measurements collected at multiple vantage points we inferred statistical properties of the interdomain traffic matrix. We used the measured characteristics of interdomain traffic to create ITMgen, a tool for generating synthetic interdomain traffic matrices that match the measured statistical properties. Finally, we characterized the peering practices of Internet transit providers using publicly available data from PeeringDB.

We developed two models of AS interconnection and dynamics and parameterized them with real-world data. ITER and GENESIS. These agent-based network formation models account for the roles of economics, interdomain traffic flow, and provider/peer selection strategies in shaping the structure of the interdomain topology. We validated these models using publicly available data, and investigated a wide range of "what-if" scenarios related to the possible evolution of the Internet ecosystem. The ITER model shed light on the"flattening" trend in the Internet's interdomain topology, and identified the key factors responsible for that transition. With the GENESIS model, we were able to simulate the network formation process, compute distinct equilibria and to also examine the behavior of sample paths that do not converge, analysis which is not possible with analytical game-theoretic models of network formation. We also used the GENESIS model with game-theoretic analysis to explain the gravitation towards Open peering by Internet transit providers and determine the economic impact of this trend.

While we have made substantial progress towards measurement and modeling of interdomain economics, work has also revealed areas where more needs to be done. First, computational models that capture the diversity of the real world -- in this case the Internet infrastructure ecosystem -- are highly complex, and thus cannot reasonably be run at Internet-scale. Scaling up our models by exploiting parallelism and distributed computation is a focus of our future work. Second, evolutionary trends in the Internet ecosystem are both influenced by and influence interdomain economics. For example, recent measurements have illuminated an expanding role of major content providers and CDNs in delivering content. Simultaneously, we see vertical integration of transit, access, and content providers, muddling traditional classifications of Internet entities and raising important questions of whether some of these players could exercise market power. Fifteen years ago the AS topology modeling involved simple customer-provider or settlement-free peering relationships between network service providers; today's relationships often fall somewhere in between these two relatively straightforward interconnection agreements between providers. Little is known about the prevalence of these more complex interdomain relationships, much less how to incorporate them into interconnection economic models. Our future work will consist of extending the scope of our computational models to account for these, and other factors that influence interconnection economics.

We disseminated results from this project widely in publications at scientific journals and conferences -- 4 journal publications and 10 conference publications resulted from this work. These publications have been cited a total of 132 times as of October 2013. We published other interesting tidbits from this research on the CAIDA blog. We began a series of workshops at CAIDA focused on Internet Economics, which included participants from experts in academia, public policy, and industry. We published reports on these workshops (2009, 2011 and 2012), in the ACM SIGCOMM Computer Communications Review (CCR). We have made all our collected measurement data, as well as the source code for our computational models and simulators, available publicly to researchers. Participants in this project made 19 presentations at research conferences, operational venues (NANOG), and policy bodies (FCC).

Additional Content

Interconnection Economics

From 2010-2013, CAIDA performed a study of the economics of Internet interconnection, supported by the NSF grant CNS-1017064, “NetSE-Econ: The economics of transit and peering interconnections in the Internet”.