The Economic Implications of Edge-Directed Routing: A Network Operator’s Perspective

Edge-directed routing, a paradigm where sources and sinks of traffic, rather than the network, specify the communication path has recently gained attention as a means to deal effectively with potential conflicts that may arise between various stakeholders in the future Internet. In this paper, we use a simple economic model to show that contrary to current economic thinking, networks can deploy edge-directed routing without raising prices, provided that the service results in a relative increase in external traffic that outweighs the relative increase in costs. However, when edge-directed routing merely results in traffic shift from one path to another, then price increases are required to make it economically viable. Hence, we recommend that edge-directed routing protocols put in place payment mechanisms and support systems in their design to facilitate various pricing strategies.