1st International ICST Workshop on Game Theory for Networks

Research Article

Paid peering among internet service providers

  • @INPROCEEDINGS{10.1145/1190195.1190207,
        author={Gireesh  Shrimali and Sunil  Kumar},
        title={Paid peering among internet service providers},
        proceedings={1st International ICST Workshop on Game Theory for Networks},
        publisher={ACM},
        proceedings_a={GAMENETS},
        year={2012},
        month={4},
        keywords={ISP peering pricing monopoly Nash equilibrium subgameperfect equilibrium capacity},
        doi={10.1145/1190195.1190207}
    }
    
  • Gireesh Shrimali
    Sunil Kumar
    Year: 2012
    Paid peering among internet service providers
    GAMENETS
    ACM
    DOI: 10.1145/1190195.1190207
Gireesh Shrimali1,*, Sunil Kumar1,*
  • 1: Stanford University, 234 Packard, Stanford, CA, 94305
*Contact email: gireesh@stanford.edu, skumar@stanford.edu

Abstract

We develop models for Internet Service Provider (ISP) peering when ISPs charge each other for carrying traffic. We study linear pricing schemes in a simple ISP peering model using a two stage sequential Nash game in which self interested providers first set linear prices for carrying peers' traffic and then choose to route their traffic according to the prices set and costs incurred by carrying traffic on their links. Under reasonable cost models, we show that rational ISPs will participate in this game. Moreover, we show that the ISP with the lower marginal cost in the absence of peering has no incentive to send traffic in a hot-potato fashion and effectively acts as a monopolist. The other provider strategically routes traffic, splitting between hot-potato and cold-potato routing. We also show that though this outcome is inefficient, both ISPs are strictly better off when compared to not peering at all. Finally, we consider appropriate cost models that make the notion of capacity explicit. Under certain conditions we show not only that the monopolist has an incentive to upgrade the capacity of its links but also that this incentive is higher when the monopolist is in a peering relationship.