Economics of Digitization

Not many years ago policy debates focused almost exclusively on the “last-mile” broadband connection to consumers’ homes. Recent public disputes between Netflix and ISPs Comcast and Verizon, however, have highlighted the importance to the consumer’s online experience of peering arrangements, content delivery networks (CDNs), and other inner workings of the Internet. At the same time, the need to continue investing in the network to keep up with increasing demand has not diminished. This event will focus on the economics underlying the current controversies and how the web of peering agreements, CDNs, last-mile and backbone networks interact to keep both money and content flowing to where it is most needed.

Internet data traffic growth shows no signs of slowing anytime soon and peak traffic is projected to grow even faster due to many factors, including growth in video and cloud-based services and richer content on major websites. The changing nature of demand for bandwidth has potentially large implications for our communications landscape. For example, it may already be straining long-standing peering and transit agreements as traditional balances of traffic change and is increasingly testing the viability of the traditional “all-you-can-eat” broadband pricing models.