A simple two-sided market model with side-payments and ISP service classes

We consider a simple two-sided market model of an Internet Service (access) Provider (ISP) and Content Provider (CP, over commodity Internet access) on a platform of user-demand. Though the model does not consider provider competition and resource congestion, it does consider advertising revenue, multiple ISP service classes, separate price sensitives for each provider type, and side-payments from CP to ISP [16]. We argue that side-payments are effectively in play even under network-neutrality regulations owing to considerations in Service-Level Agreements (SLAs) of asymmetries in traffic aggregates at boundaries (NNIs) between eyeball ISPs and transit ISPs, the latter serving the CPs remote to the eyeball ISPs. Finally, we consider a game between content providers based on “managed” and commodity-Internet-access services.