Intercarrier Compensation between Providers of Different Layers: Advantages of Transmission Initiator Determination

Conference paper
Part of the Lecture Notes in Computer Science book series (LNCS, volume 6091)


This paper addresses the important issue of providing balanced allocation of the interconnection costs between networks. We analyze how beneficial is the determination of the original initiator of a transmission to the providers of different layers. The introduced model, where intercarrier compensation is based on the differentiated traffic flows, was compared with the existing solution, which performs cost compensation based on the traffic flows. For our analysis we considered both unilateral and bilateral settlement arrangements.


Interconnection arrangement intercarrier compensation Internet economics 


  1. 1.
    Laffont, J.J., Tirole, J.: Competition in telecommunications. MIT Press, Cambridge (2000)Google Scholar
  2. 2.
    DeGraba, P.: Bill and Keep at the central office as the efficient interconnection regime, FCC, OPP, Working Paper 33 (December 2000)Google Scholar
  3. 3.
    Federal Communications Commission: In the matter of developing a unified intercarrier compensation regime, Notice of Proposed Rulemaking (April 27, 2001)Google Scholar
  4. 4.
    Bezzina, J.: Interconnection challenges in a converging environment, the World Bank, Global Information and Communication Technologies Department (2005)Google Scholar
  5. 5.
    Dymond, A.: Telecommunications challenges in developing countries - asymmetric interconnection charges for rural areas, World Bank working paper (December 2004)Google Scholar
  6. 6.
    Lie, E.: International Internet interconnection next generation networks and development, GSR (2007)Google Scholar
  7. 7.
    Armstrong, M.: The theory of access pricing and interconnection. In: Handbook of Telecommunications Economics, vol. 1. North-Holland, Amsterdam (2002)Google Scholar
  8. 8.
    Noam, E.: Interconnection practices. In: Handbook of Telecommunications Economics, vol. 1. North-Holland, Amsterdam (2002)Google Scholar
  9. 9.
    Kende, M.: The digital handshake: connecting Internet backbones, FCC, OPP Working Paper No. 32 (September 2000)Google Scholar
  10. 10.
    Davoyan, R., Altmann, J.: Investigating the influence of market shares on interconnection settlements. In: Proceedings of IEEE Globecom (November 2008)Google Scholar
  11. 11.
    Davoyan, R., Altmann, J.: Investigating the role of a transmission initiator in private peering arrangements. In: Proceedings of IFIP/IEEE IM (June 2009)Google Scholar
  12. 12.
    Davoyan, R., Altmann, J., Effelsberg, W.: Intercarrier Compensation in Unilateral and Bilateral Arrangements. In: Proceedings of IEEE ICCCN (August 2009)Google Scholar
  13. 13.
    Laffont, J.J., Marcus, S., Rey, P., Tirole, J.: Internet interconnection and the off-net-cost pricing principle. RAND Journal of Economics (2003)Google Scholar
  14. 14.
    Weiss, M.B., Shin, S.: Internet Interconnection Economic Model and its Analysis: Peering and Settlement. Netnomics 6(1) (2004)Google Scholar
  15. 15.
    Besen, S., Milgrom, P., Mitchell, B., Srinagesh, P.: Advancing in routing technologies and Internet peering agreements. American Economic Review (2001)Google Scholar
  16. 16.
    Shrimali, G., Kumar, S.: Bill-and-Keep peering, in Telecom. Policy (2006)Google Scholar
  17. 17.
    Huston, G.: Interconnection, peering, and settlements, Part II. Internet Protocol Journal, Cisco Publications 2(2), 2–23 (1999)MathSciNetGoogle Scholar
  18. 18.
    Yoon, K.: Interconnection economics of all-IP networks. Review of Network Economics 5 (2006)Google Scholar
  19. 19.
    Huston, G.: Interconnection and peering (November 2000)Google Scholar
  20. 20.
    Economides, N.: The economics of networks. International Journal of Industrial Organization 14(6), 673–699 (1996)CrossRefGoogle Scholar
  21. 21.
    Huston, G.: ISP survival guide: strategies for running a competitive ISP. Wiley, Chichester (1998)Google Scholar
  22. 22.
    Davoyan, R., Altmann, J., Effelsberg, W.: A new bilateral arrangement between interconnected providers. In: Reichl, P., Stiller, B., Tuffin, B. (eds.) ICQT 2009. LNCS, vol. 5539, pp. 85–96. Springer, Heidelberg (2009)CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2010

Authors and Affiliations

  1. 1.Department of Mathematics and Computer ScienceUniversity of MannheimGermany

Personalised recommendations