Regulation of Off-Network Pricing in a Nonneutral Network

Abstract

Representatives of several Internet service providers (ISPs) have expressed their wish to see a substantial change in the pricing policies of the Internet. In particular, they would like to see content providers (CPs) pay for use of the network, given the large amount of resources they use. This would be in clear violation of the "network neutrality" principle that had characterized the development of the wireline Internet. Our first goal in this paper is to propose and study possible ways of implementing such payments and of regulating their amount. We introduce a model that includes the users' behavior, the utilities of the ISP and of the CPs, and the monetary flow that involves the content users, the ISP and CP, and in particular, the CP's revenues from advertisements. We consider various game models and study the resulting equilibria; they are all combinations of a noncooperative game (in which the ISPs and CPs determine how much they will charge the users) with a "cooperative" one on how the CP and the ISP share the payments. We include in our model a possible asymmetric weighting parameter (that varies between zero to one). We also study equilibria that arise when one of the CPs colludes with the ISP. We also study two dynamic game models and study the convergence of prices to the equilibrium values.