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Network Economics and the Allocation of Savings

A Model of Peering in the Voice-over-IP Telecommunications Market

  • Book
  • © 2012

Overview

Authors:
  1. Philipp Servatius

    1. , Department Quantitative Economics, Université de Fribourg, Fribourg, Switzerland

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  • First analysis of the VoIP Telecommunications Market Network-based framework of interconnection savings
  • Innovative n-player model of interconnection, including long distance and termination fees
  • Contains a concise over view of the methods of game theory and network theory
  • Contains a short overview of the liberalization of telecommunications markets in the 1980s and 1990s
  • Includes supplementary material: sn.pub/extras

Part of the book series: Lecture Notes in Economics and Mathematical Systems (LNE, volume 653)

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Table of contents (8 chapters)

  1. Front Matter

    Pages i-xv
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  2. Selected Theoretical Concepts

    1. Front Matter

      Pages 7-7
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    2. Motivation and Nontechnical Overview

      • Philipp Servatius
      Pages 1-6

    3. The Theory of Games

      • Philipp Servatius
      Pages 9-118

    4. Network Theory in Economics

      • Philipp Servatius
      Pages 119-155

  3. Applications to Peering in Telecommunications

    1. Front Matter

      Pages 157-157
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    2. Telecommunications and the Internet

      • Philipp Servatius
      Pages 159-177

    3. A Model of Peering Among VoIP Firms

      • Philipp Servatius
      Pages 179-234

    4. Network Formation in Peering

      • Philipp Servatius
      Pages 235-267

    5. Concluding Remarks, Recommendations, and Future Research

      • Philipp Servatius
      Pages 269-272

    6. Appendix A Selected Mathematical Concepts

      • Philipp Servatius
      Pages 273-285

  4. Back Matter

    Pages 287-297
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Keywords

About this book

This book provides a game theoretic model of interaction among VoIP telecommunications providers regarding their willingness to enter peering agreements with one another. The author shows that the incentive to peer is generally based on savings from otherwise payable long distance fees. At the same time, termination fees can have a countering and dominant effect, resulting in an environment in which VoIP firms decide against peering. Various scenarios of peering and rules for allocation of the savings are considered. The first part covers the relevant aspects of game theory and network theory, trying to give an overview of the concepts required in the subsequent application. The second part of the book introduces first a model of how the savings from peering can be calculated and then turns to the actual formation of peering relationships between VoIP firms. The conditions under which firms are willing to peer are then described, considering the possible influence of a regulatory body.

Authors and Affiliations

  • , Department Quantitative Economics, Université de Fribourg, Fribourg, Switzerland

    Philipp Servatius

About the author

Philipp Servatius took up employment in the private sector after being awarded his doctorate from the Department of Quantitative Economics at the University of Fribourg. He now works as analyst for a global reinsurer and lives in Zurich and Fribourg, Switzerland.

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