Market Driven Network Neutrality and the Fallacy of a Two-Tiered Internet Traffic Regulation

Paper to be presented at the 42nd Research Conference on Communication, Information and Internet Policy (TPRC), September 12-14, 2014, George Mason University, Arlington,VA.

20 Pages Posted: 16 Aug 2014

See all articles by Guenter Knieps

Guenter Knieps

University of Freiburg

Volker Stocker

Technische Universität Berlin (TU Berlin); Weizenbaum Institute for the Networked Society

Date Written: August 15, 2014

Abstract

Within a Generalized DiffServ architecture entrepreneurial flexibility for building intelligent multipurpose traffic architectures enables the provision of a variety of tailored traffic services for a wide range of heterogeneous application services In order to solve the entrepreneurial traffic capacity allocation problem, we propose an incentive compatible pricing and quality of service (QoS) differentiation model for the Generalized DiffServ architecture resulting in market driven network neutrality. Optimal allocation decisions based on the opportunity costs of capacity usage require to simultaneously take into account all relevant traffic classes rather than 1) to exclude traffic classes (by means of minimal traffic quality requirements), 2) to prescribe a maximal or minimal number of traffic classes or 3) to arbitrarily include parameter specificities for or levels of QoS which are not reflected by demand side. Of particular importance is that the opportunity costs of capacity reservations for deterministic premium traffic classes are interrelated with subsequent non-deterministic traffic classes. As a consequence, every form of market split would be artificial.

Keywords: Internet traffic management, network neutrality regulation, priority pricing, quality of service (QoS)

JEL Classification: L 51, L86, L96

Suggested Citation

Knieps, Guenter and Stocker, Volker and Stocker, Volker, Market Driven Network Neutrality and the Fallacy of a Two-Tiered Internet Traffic Regulation (August 15, 2014). Paper to be presented at the 42nd Research Conference on Communication, Information and Internet Policy (TPRC), September 12-14, 2014, George Mason University, Arlington,VA., Available at SSRN: https://ssrn.com/abstract=2480963 or http://dx.doi.org/10.2139/ssrn.2480963

Guenter Knieps (Contact Author)

University of Freiburg ( email )

Platz der Alten Synagoge
Freiburg, D-79085
Germany

Volker Stocker

Technische Universität Berlin (TU Berlin) ( email )

Straße des 17
Juni 135
Berlin, 10623
Germany

Weizenbaum Institute for the Networked Society ( email )

Berlin
Germany

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