Preventing competition using side payments: when non-neutrality creates barriers to entry

Patrick Maillé (1, 2) , Bruno Tuffin (3)

1 OCIF - Objets communicants pour l'Internet du futur
2 RSM - Département Réseaux, Sécurité et Multimédia
3 DIONYSOS - Dependability Interoperability and perfOrmance aNalYsiS Of networkS

Network neutrality is often advocated by content providers, stressing that side payments to Internet Service Providers would hinder innovation. However, we also observe some content provider actually paying those fees. This paper intends to explain such behaviors through economic modeling, illustrating how side payments can be a way for an incumbent content provider to prevent new competitors from entering the market. We investigate the conditions under which the incumbent can benefit from such a barrier-to-entry, and the consequences of that strategic behavior on the other actors: content providers, users, and the Internet Service Provider. We also describe how the Nash bargaining solution concept can be used to determine the side payment.

Domaines: Recherche opérationnelle [math.OC]

Patrick Maillé, Bruno Tuffin. Preventing competition using side payments: when non-neutrality creates barriers to entry. Netnomics: Economic Research and Electronic, 2017, 18 (1), pp.3-22. ⟨10.1007/s11066-016-9110-6⟩. ⟨hal-01398913⟩