7Network Economics

As already pointed out in the generic network model, inter-operator cooperation as well as terminal availability to relay other users’ traffic would significantly improve overall network performance. In order to implement these concepts strong economic incentives are needed to motivate the operators and the terminals to accept these concepts in practice. In this chapter we discuss the possible economic relations between different subjects in the network and provide the tools for the analysis of these relations. The chosen economic and technology segments in the network interact in a complex way and they should be studied together.

7.1 Fundamentals of Network Economics

Conventional performance evaluations of communication networks focus on the technology where protocols define precise rules of operation. Those studies assume a model, network utilization, and network characteristics and evaluate performance measures. However, performance affects how users utilize the network. Also, investments by network providers affect performance and consequently network utilization. In the generic network model, we call the relation between (i) users and network providers, (ii) different network providers, and (iii) different terminals of the same or different network providers as the economic segments of the network. This chapter discusses jointly the economic and technology segments of the network.

There are questions that should be answered in the process of implementation ...

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