A study of internet industry structural determinants with interconnection strategies: will regulation be necessary?

Abstract

Purpose

The purpose of this paper is to survey the internet industry structure from the interconnection point of view and demonstrate why peering is difficult to achieve in the local access market.

Design/methodology/approach

An internet interconnection game model is built and equilibrium analysis is provided in this paper.

Findings

The paper finds that the key element as an internet industry structural determinant is peering interconnection and the relationships created by that interconnectedness. Even if peering is an efficient way to exchange traffic freely, the dominant strategy for small, local internet service providers (ISPs) in the internet access market is transit. This result shows that it is hard to make a peering arrangement for the small ISPs with small amounts of traffic and a limited number of subscribers.

Originality/value

This paper supports internet policy makers reviewing the internet interconnection policy.

Citation

Shin, S., Tucci, J. and Glaser‐Segura, D. (2006), "A study of internet industry structural determinants with interconnection strategies: will regulation be necessary?", info, Vol. 8 No. 1, pp. 29-41. https://doi.org/10.1108/14636690610643267