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 it time critical or not is transported at the same speed. However, recent trends in the internet are changing this structure. The practices of multi-homing and using content delivery networks reduce the commodity nature of data being transported and put terminating Internet service providers in a position to price discriminate against specific providers or types of traffic. We firstly formalize multi-homing and content delivery networks, we then derive end user prices for paid content and lastly show consequences of the modeled situation. We thus show how the two technologies to bypass crowded peerings change the Internet business model. Traffic which is sensitive to transport quality, such as business critical or delay sensitive traffic, will be paying higher fees to terminating ISPs.