Metrics for Assessing Internet Business Models and Sustainability
19 Pages Posted: 25 Feb 2013 Last revised: 15 Aug 2013
Date Written: August 13, 2013
As the internet changes structure and behavior in ways better modeled in terms of modular composition than as an architecture based on functional links between physical layers and services, well established network metrics appear increasingly less suited to assessing economic and business strategy features. This change is described by Labovitz (Labovitz, Lekel-Johnson et al. 2010), Fransman (Fransman 2010), Clark (Clark, Lehr et al. 2011), Yoo (Yoo 2012), Frischmann (Frischmann 2012) and in our own recent work (Liebenau, Elaluf-Calderwood et al. 2012). Increasingly, measurement approaches such as those conducted by the Center for Advanced Internet Data Analysis at the University of California, San Diego [CAIDA] are reassessing what when, how and why metrics are collected.
The structure of emerging business models, the value generated from certain kinds of products and services delivery, and the spillover effects that concern public policy are all masked by the typical focus on broadband speed, routing tables and traffic estimates between nodes. Along with current discussions about “quality of experience” (Kruse 2009), and new approaches to concentration (Noam 2010), we address the problem of how to assess information asymmetries (Claffy 2008), the relationships among different kinds of traffic (transit, private, peered, intra-network, etc.), flows of funds and other features that characterize the interrelationships of all major aspects of internet core businesses, whether regulated or not.
In this paper we describe a view of how changes to the layered model of internet architecture has created space for new services and products and in particular the mixing of roles across previous boundaries described in part by the distinction between regulated and unregulated segments. We then consider the utility of current metrics and show how additional or alternative metrics can enhance our understanding such that we can come to a far better view of trends and practices on the internet. We show what minimum requirements there are to data that ought to be visible to all stakeholders of the internet.
Through a detailed taxonomy of different sources of internet metrics (e.g. traffic through internet exchanges, charges for services, Cisco network data, Sandvine traffic statistics, etc.) we show the utility of new ways to capture and assess the important economic characteristics that will help in promoting the sustainability of the internet. We begin with a critique of a typical matrix describing web measurements associated with the physical and logical layers of the internet (e.g. from CENDI of the U.S. Government; Hodge, 2000). We assess the value of the criteria traditionally used and show how some are misleading, some inappropriate, and some useful when considered in conjunction with new criteria of assessment. We show how a careful inclusion of jurisdictional information, government fiscal policies and regulation, costing estimates, maintenance, network qualities and other evidence from political economy can provide a superior metric that will provide the basis for better economic analyses and in judging business models and sustainability.
References Claffy, K. (2008). Ten Things Lawyers should know about the Internet. San Diego, USA, CAIDA - University of San Diego: 24. Clark, D., W. Lehr, et al. (2011). Interconnection in the Internet: the policy challenge. 39th Research Conference on Communication, Information and Internet Policy. George Mason University, Arlington, VA. Fransman, M. (2010). The New ICT Ecosystem: Implications for Policy and Regulation. Cambridge, Cambridge University Press. Frischmann, B. (2012). Infrastructure - The Social Value of Shared Resources. Oxford, Oxford University Press. Hodge, G. (2000). Web Metrics and Evaluation: Current State of Implementation Among the CENDI Agencies PHASE 1. Oak Ridge, Tennessee, Information International Associates, Inc: 23. Kruse, J. (2009). Priority and Internet Quality Diskussionpapierreihe - Working Paper Series. Hamburg, Germany, Department of Economics - Helmut Schumidt Universitat: 24. Labovitz, C., S. Lekel-Johnson, et al. (2010). Internet inter-domain traffic. SIGCOMM'20, New York, USA, ACM Digital Library. Liebenau, J., S. Elaluf-Calderwood, et al. (2012). "Strategic Challenges for the European Telecom Sector: The Consequences of Imbalances in Internet Traffic." Journal of Information Policy 2: 248-272. Noam, E. M. (2010). "Media Ownership and Concentration in America." The Journal of American Culture 33(5): 348-349. Yoo, C. S. (2012). The Dynamic Internet: How Technology, Users and Businesses are Transforming the Network, AEI Press.
Keywords: Internet metrics, Internet business models, Internet sustainability, Internet policy
JEL Classification: O30, M20, l96, l50
Suggested Citation: Suggested Citation