The political economy of congestion charges and settlements in packet networks

William Lehr and Martin BH Weiss

Telecommunications Policy, 1996, vol. 20, issue 3, 219-231

Abstract: This paper examines the case for usage-based pricing in the Internet by extending earlier work on congestion pricing in a single network to the case of multiple, competing carriers. A settlements problem arises in this context because of the need to allocate revenues among the carriers. The settlements and pricing problems are closely related. After deriving the optimal congestion prices, we discuss alternative settlements mechanisms and identify a number of the technical and strategic issues that require further research before practical implementation of usage pricing in a multiple domain network is feasible.

Date: 1996
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