Wednesday, November 19, 2014

Net Neutrality and Opening Up the Black Box

I very much care about fairness, equity, and making sure that there is no discrimination and that also is the case for the Internet.

Net neutrality is a topic that is now being fiercely debated on the news and talk shows and has many taking political sides.

To many consumers, and even businesses, the Internet is a “black box,” which has revolutionized the way in which economic and social transactions and interactions are conducted, entertainment is obtained and experienced, communications are done, and numerous educational activities participated in. If one were to ask Internet users to identify the mechanisms by which the videos that they view, the news that they read online, and the messages that they disseminate, one may very well find that a consumer would be able to identify the content provider and, perhaps, the network provider. The user/consumer will not know where the content is being delivered from, the routes that have been taken to transmit the data, and the service providers that might have been transacted with en route. Moreover, they will not be aware of the encumbered costs and, very likely, the profit garnered.

Hence, we are dealing with information asymmetry in today’s Internet, a subject that, in terms of quality, dates to the Nobel laureate’s George Akerlof’s classic 1970 paper. Consumers, as well as businesses, are unaware of the intermediaries involved in network provision, the costs and profits of service providers, and are locked into contracts of durations that are inflexible and, possibly, not optimal from their utility perspectives. Such an economic landscape creates an inertia for innovation as well as consumer satisfaction and limits competitive behavior. Furthermore, it is not clear, due to the lack of transparency and information asymmetry, whether scarce resources are being utilized in an optimal manner, with the understanding that different stakeholders and decision-makers may be faced with distinct objective functions, which may, include, for example, aspects of environmental sustainability as well as cybersecurity and even enhanced quality for network transport provision.

Furthermore, the constraints that stakeholders and decision-makers are faced with are not transparent, which may result of an inefficient use of resources. The information asymmetry results in a lack of trust, and, even to a certain extent, paranoia on the consumers’ part since vital economic and engineering information is not shared in a transparent and clear manner.

The topic inspired us to write a Guest Commentary entitled, "Net Neutrality, the Past, Present, Future and What It Means to Us"  for

My colleagues and I have been working since 2011 on a project funded by the National Science Foundation (NSF), Network Innovation Through Choice. As part of the project, we are envisioning the components of an economy plane for Future Internet Architectures and, in particular, one which we are developing and which we are calling ChoiceNet. 

Specifically, we wish to offer consumers more choices and in a transparent way. Why should we be locked into long-term contracts, for example, when it comes to Internet services?!

Towards that end, we have proposed duration-based contracts for a service-oriented Internet. In the paper, A Game Theory Model for a Differentiated Service-Oriented Internet with Duration-Based Contracts, co-authored with my doctoral student, Sara Saberi, Professor Tilman Wolf, the PI on our NSF project, and Professor Ladimer S. Nagurney, we introduced a game theory model of a service-oriented Internet in which the network providers compete in usage service rates, quality levels, and duration-based contracts. We formulate the network-based Nash equilibrium conditions as a variational inequality problem, provide qualitative properties of existence and uniqueness, and describe an algorithm, which yields closed-form expressions at each iteration. The numerical examples include sensitivity analysis for price functions at the demand markets as well as variations in the upper bounds on the quality levels for the services.

The paper will be presented at the INFORMS Computing Society Conference in January 2015 in Richmond, VA and will be published in its Proceedings.

And speaking of quality, our paper,  A Network Economic Game Theory Model of a Service-Oriented Internet with Price and Quality Competition in Both Content and Network Provision, appears in the December 2014 issue of the INFORMS journal Service Science.

In the meantime, I am sure that the lively discussions on net neutrality and regulations will continue!

Transparency is key!