Interconnecting eyeballs to content: A Shapley value perspective on ISP peering and settlement

Abstract

Internet service providers (ISPs) must interconnect to provide global Internet connectivity to users. The payment structure of these interconnections are often negotiated and maintained via bilateral agreements. Current differences of opinion in the appropriate revenue model in the Internet has on occasion caused ISPs to de-peer from one another, hindering network connectivity and availability.

Our previous work demonstrates that the Shapley value has several desirable properties, and that if applied as the revenue model, selfish ISPs would yield globally optimal routing and interconnecting decisions. In this paper, we focus our investigation of Shapley value in networks with two basic classes of ISP: content and eyeball. In particular, we analyze the revenue distribution between ISPs with elastic and inelastic customer demands, and calculate the bilateral payments between ISPs that implement the Shapley revenue. Our results illustrate how ISP revenues are influenced by different demand models. In particular, the marginal revenue lost by de-peering for an eyeball ISP with inelastic demand is inversely proportional to the square of its degree of connectivity to content ISPs. In practice, these results provide a guideline for ISPs, even in peering relationships, to negotiate bilateral payments and for regulatory institutions to design pricing regulations.