ISP vs. ISP+CDN: Can ISPs in Duopoly Profit by Introducing CDN Services?Dongmyung LeeSeoul National UniversityJune 11, 2012
Joint work with J. Mo and J. Park
W-PIN 2012, London, UK
Contents• Introduction•Model•The Game•Numerical Results•Conclusion
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What is Content Delivery Network (CDN)?
CDN: Content Delivery Net-work
ISP A
CP BCP A
ISP B
User A User B
Re-gion:
<Internet Ecosystem without CDN provider>
: Traffic Flow
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A B
What is Content Delivery Network (CDN)?
CDN: Content Delivery Net-work
ISP A
CP BCP A
ISP B
User A User B
Re-gion:
<Internet Ecosystem with CDN provider>
: Traffic Flow
CDN
: Cash Flow
$$$
CacheServer
CacheServer
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A B
Current Issues related to CDN• ISP-operated CDN
▫ “BT Wholesale Readies CDN Launch” (Video Nuze, 2010) “The goal is to…maintain highest quality of service to their content customers”
▫ “AT&T Announces New CDN Service” (ReadWrite Cloud, 2011) “AT&T will enable content to flow directly from its 38 data centers around the world, to reduce tran-
sit and latency times
• Other Telco CDNs▫ Level 3▫ Verizon▫ Deutsche Telekom▫ Orange France Telecom▫ Korea Telecom▫ …
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Problem Statement
ISP Ausers CPs <Relationship without CDN>
ISP Ausers CPs
CDN
CDN: Content Delivery Net-work
<Relationship with CDN>
<Relationship with ISP+CDN>ISP Ausers CPs
CDN
• Key Question:▫ Is there an incentive for an ISP under competition to vertically integrate CDN?
ISP+CDN
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Model• Two-sided market with ISPs as platforms• ISPs are located à la Hotelling where consumers and CPs are distributed in
[0,1]
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Utility• Consumer and CP Utility (Hotelling model)
▫ Consumer’s Utility
▫ Content Provider’s Utility
• ISPs’ Payoffs
ti: market share of ISP i in the consumer side si: market share of ISP i in the CP side hi: hit ratio of ISP i‘s cache server
▫ Full market coverage:
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Delay• Delay function
τi: incoming traffic of ISP i’s network βi: network capacity parameter (capa.=1/βi)
▫ Network delay
▫ User’s perceived delay
▫ CP’s perceived delay
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The Game• 4-stage Stackelberg game
1. CP pricing decisions: ISPs determine CP prices a1 and a2
2. CP connection decisions: CPs choose the ISPs
3. Consumer pricing decisions: ISPs determine User prices p1 and p2
4. User connection decisions: Users choose the ISPs
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Market Share• Market Share of an ISP on one side becomes a function of the other
• Definition 1. (Equilibrium Market Share) An equilibrium market share is defined as the pair (t1
*, s1*) that satisfies
• Proposition 1. There exists an equilibrium market share
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Numerical Results (with low congestion, β=3)
• “Competition effect” vs. “Delay reduction effect”
MS of ISP+CDN
MS of pure ISPDelay advan-tage
Price advantagePrice decrease
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ISP+CDN vs. pure ISP: Who is better?• Map of dominance
▫ Linear cache server cost assumption
[Delay reduction effect] : [Competition ef -fect]
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THANKS AND QUES-
TIONS
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