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Interconnection Economics of All-IP Networks

The Review of Network Economics

Vol. 5, Issue 3 - September 2006, pp 351 - 365

  Kiho Yoon
Department of Economics, Korea University
E-mail: [email protected]

  This paper is an exploratory study on the interconnection economics of All-IP networks. To understand the economics of the yet-to-be-realized All-IP networks, this paper begins with discussing three important features of current IP networks: packet switching, receiver benefit, and two-sidedness. It then develops simple models of interconnection for basic fixed fee settlements and for session-based charges. The analysis shows that interconnection settlements depend on network size, market competitiveness, direct and cross network externalities, and costs. Some policy issues are also briefly discussed.

Keywords: Interconnection, Internet protocol, two-sided

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