Quality of Service Delivery: Economic Effects of Multi-Homing and Content Delivery Networks

The structure of the Internet serves as a big commoditizer of all traffic. Therefore all data, be ittime critical or not is transported at the same speed. However, recent trends in the internet arechanging this structure. The practices of multi-homing and using content delivery networks reducethe commodity nature of data being transported and put terminating Internet service providers in aposition to price discriminate against specific providers or types of traffic. We firstly formalizemulti-homing and content delivery networks, we then derive end user prices for paid content andlastly show consequences of the modeled situation. We thus show how the two technologies tobypass crowded peerings change the Internet business model. Traffic which is sensitive to transportquality, such as business critical or delay sensitive traffic, will be paying higher fees to terminatingISPs.