Internet Economics

Abstract

The Internet, a growing network of networks, is an often touted and often misunderstood technology. It has its own infrastructure complete with service providers, private networks, user communities, international links, etc. similar to telephone or telegraph industries. However, the Internet is more decentralized and less application-specific than traditional telecommunication industries. These differences extend beyond the technology of the Internet to the economics and policies. This paper explores Internet economics, a growing field which encompasses the technology, economics, and policy surrounding the Internet. It identifies different communities who have overlapping interests in this field and how their preconceived notions of how the Internet operates create contradictory views on how this technology will continue to evolve in a self-sustaining manner. Specifically, it explores the issue of usage sensitive pricing versus flat-fee pricing as applied to the Internet. It provides anecdotal evidence to support general views communities have towards pricing issues. It identifies roadblocks to implement usage sensitive pricing on the Internet. It describes short-term projects that will provide better data to enable a better understanding of the issues.