TOWARDS SUSTAINABLE QUALITY OF SERVICE IN INTERCONNECTION

Ioanna Constantiou () and Nikolaos A. Mylonopoulos
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Nikolaos A. Mylonopoulos: Athens Laboratory of Business Administration

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Abstract: This paper analyses the structure of the Internet marketplace and the business relationships of key players involved in network services provision. A brief overview of existing pricing policies and research work in this area is presented and some new issues are introduced. We believe that the role of information asymmetry is critical when considering agreements for Internet access and interconnection. In negotiation and contract preparation, information asymmetry gives rise to adverse selection. The current structure of connectivity agreements does not address information asymmetries thus allowing the possibility of opportunistic behaviour in the form of moral hazard. Inasmuch as interconnection agreements involve sharing and/or exchanging network resources, either party will tend to exploit the agreement to its own advantage (i.e. conserving its own resources) and, possibly, to the detriment of the other (i.e. overutilising the other’s resources). The discussion focuses on interconnection agreements between Internet Service Providers, namely peering and transit. The paper concludes with an outline of an incentive compatible mechanism that can sustain quality of service requirements in interconnection agreements.

Keywords: interconnection; information; asymmetry (search for similar items in EconPapers)
JEL-codes: C7 D8 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-net
Date: 2002-08-21, Revised 2002-09-02
Note: Type of Document - pdf; prepared on PC; pages: 12; figures: included. Published in the Proceedings of ECIS 2001, Bled Slovenia
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpga:0207004

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