Private peering, transit and traffic diversion

  • Authors:

  • Narine Badasyan;Subhadip Chakrabarti

  • Affiliations:

  • Department of Economics and Finance, Murray State University, Murray, USA 42071;School of Management and Economics, Queen's University Belfast, Belfast, UK BT7 1NN

  • Venue:
  • Netnomics
  • Year:
  • 2005

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Abstract

Private peering refers to settlement-free connectivity agreements between Internet Service Providers meant to interconnect their networks by-passing congested National Access Points. We explore the incentives for bilateral peering with particular emphasis on traffic diversion. A private peering agreement between two providers improves the quality of both and would divert traffic from third parties. This provides an incentive for peering. A three-player model is introduced and analyzed. Complication introduced by price competition and heterogeneous consumers are also studied.