A Study of Non-Neutral Networks with Usage-based Prices

Hahn and Wallsten wrote that network neutrality "usually means that broadband service providers charge consumers only once for Internet access, do not favor one content provider over another, and do not charge content providers for sending information over broadband lines to end users." In this paper we study the implications of non-neutral behaviors under a simple model of linear demand-response to usage-based prices. We take into account advertising revenues and consider both cooperative and non-cooperative scenarios. In particular, we model the impact of side-payments between service and content providers. We also consider the effect of service discrimination by access providers, as well as an extension of our model to non-monopolistic content providers

Subsidization Competition: Vitalizing the Neutral Internet

Unlike telephone operators, which pay termination fees to reach the users of another network, Internet Content Providers (CPs) do not pay the Internet Service Providers (ISPs) of users they reach. While the consequent cross subsidization to CPs has nurtured content innovations at the edge of the Internet, it reduces the investment incentives for the access ISPs to expand capacity. As potential charges for terminating CPs' traffic are criticized under the net neutrality debate, we propose to allow CPs to voluntarily subsidize the usagebased fees induced by their content traffic for end-users. We model the regulated subsidization competition among CPs under a neutral network and show how deregulation of subsidization could increase an access ISP's utilization and revenue, strengthening its investment incentives. Although the competition might harm certain CPs, we find that the main cause comes from high access prices rather than the existence of subsidization. Our results suggest that subsidization competition will increase the competitiveness and welfare of the Internet content market; however, regulators might need to regulate access prices if the access ISP market is not competitive enough. We envision that subsidization competition could become a viable model for the future Internet

A Strategic Guide on Two-Sided Markets Applied to the ISP Market

This paper looks at a new body of literature that deals with two-sided markets and focuses on the Internet Service Provider (ISP) segment. ISPs seem to act as a platform enabling transactions between web sites and end consumers. We propose a strategic guide for ISPs that covers features of two-sided markets such as strong externalities and discuss how these market characteristics can affect competition policy.Platform; externalities; price allocation; competition policy

The Effects of Twitter Sentiment on Stock Price Returns

Social media are increasingly reflecting and influencing behavior of other complex systems. In this paper we investigate the relations between a well-know micro-blogging platform Twitter and financial markets. In particular, we consider, in a period of 15 months, the Twitter volume and sentiment about the 30 stock companies that form the Dow Jones Industrial Average (DJIA) index. We find a relatively low Pearson correlation and Granger causality between the corresponding time series over the entire time period. However, we find a significant dependence between the Twitter sentiment and abnormal returns during the peaks of Twitter volume. This is valid not only for the expected Twitter volume peaks (e.g., quarterly announcements), but also for peaks corresponding to less obvious events. We formalize the procedure by adapting the well-known "event study" from economics and finance to the analysis of Twitter data. The procedure allows to automatically identify events as Twitter volume peaks, to compute the prevailing sentiment (positive or negative) expressed in tweets at these peaks, and finally to apply the "event study" methodology to relate them to stock returns. We show that sentiment polarity of Twitter peaks implies the direction of cumulative abnormal returns. The amount of cumulative abnormal returns is relatively low (about 1-2%), but the dependence is statistically significant for several days after the events

Network Non-neutrality Debate: An Economic Analysis

This paper studies the economic utilities and the quality of service (QoS) in a two-sided non-neutral market where Internet service providers (ISPs) charge content providers (CPs) for the content delivery. We propose new models on a two-sided market which involves a CP, an ISP, end users and advertisers. The CP may have either the subscription revenue model (charging end users) or the advertisement revenue model (charging advertisers). We formulate the interactions between the ISP and the CP as a noncooperative game problem for the former and an optimization problem for the latter. Our analysis shows that the revenue model of the CP plays a significant role in a non-neutral Internet. With the subscription model, both the ISP and the CP receive better (or worse) utilities as well as QoS in the presence of side payment at the same time. However, with the advertisement model, the side payment impedes the CP from investing on its contents.Comment: 15 pages, 10 figure

Our gas challenge: the role of gas in Victorian households

Natural gas in Victoria is the main source of energy for residential heating, cooking, and hot water. Our use of gas has been built on a history of plentiful supply and relatively low and stable prices. However, the construction of export facilities in Queensland will link Australia’s eastern gas market to the international market for the first time, making wholesale gas prices both higher and more volatile. Higher wholesale prices will flow on to higher retail prices – and as the biggest residential users of gas in Australia, Victorians households will be more affected than households in any other state. Many are unprepared for price increases. Our Gas Challenge brings together the most comprehensive and current information about Victorian residential use of gas published at the time of writing. Section 1 introduces the report, and Section 2 provides a brief history of gas in Victoria. Section 3 details the number of Victorian households using gas, what type of gas they use, where they use it, and differences in consumption by tenancy, income, and dwelling type. Section 4 examines how much gas Victorians use, and Section 5 what for. Section 6 explores how much Victorians spend on gas and what concessions are available, while Section 7 looks at gas expansion in regional Victoria. Finally, Section 8 analyses the implications of the information for policy makers and identifies key areas to address. The average Victorian household spends around $1,200 per year on gas, and retail prices are expected to rise by 24$300 per year may find many unprepared, in particular, low income and vulnerable households, renters, and social housing tenants. The effects will be felt widely: over 90% of Victorian households have either a mains gas connection or use liquefied petroleum gas (LPG) or bottled gas. Close to two million households will face higher prices and higher bills, across income levels and regions. Consumers are not sufficiently aware of the rising price trajectory of gas or its implications for them. The Victorian Government needs to address this issue as a priority. The role of gas as a continuing cheap alternative to electricity is in doubt, and both consumers and the Government must revisit their attitudes toward gas. Governments have a role in providing information to consumers to help them make better choices about appliances and gas contracts, encouraging consumers’ uptake of energy efficiency measures, and assisting consumers who are vulnerable or face barriers to taking action (e.g. renters, social housing tenants). Recommended responses include: information and education campaigns; appliance energy and labelling schemes that allow cross-fuel comparisons; research into the relative life cycle costs of electric vs. gas appliances; energy efficiency programs targeting high energy users; re-assessment of current energy schemes and concessions to ensure their appropriateness; and upgrades to housing stock