The Economics of Quality Sponsored Data in Non-Neutral Networks (1501.02785v5)

Abstract: The growing demand for data has driven the Service Providers (SPs) to provide differential treatment of traffic to generate additional revenue streams from Content Providers (CPs). While SPs currently only provide best-effort services to their CPs, it is plausible to envision a model in near future, where CPs are willing to sponsor quality of service for their content in exchange of sharing a portion of their profit with SPs. This quality sponsoring becomes invaluable especially when the available resources are scarce such as in wireless networks, and can be accommodated in a non-neutral network. In this paper, we consider the problem of Quality-Sponsored Data (QSD) in a non-neutral network. In our model, SPs allow CPs to sponsor a portion of their resources, and price it appropriately to maximize their payoff. The payoff of the SP depends on the monetary revenue and the satisfaction of end-users both for the non-sponsored and sponsored content, while CPs generate revenue through advertisement. We analyze the market dynamics and equilibria in two different frameworks, i.e. sequential and bargaining game frameworks, and provide strategies for (i) SPs: to determine if and how to price resources, and (ii) CPs: to determine if and what quality to sponsor. The frameworks characterize different sets of equilibrium strategies and market outcomes depending on the parameters of the market.