Service consolidation and interconnection among internet service providers

The modern-day Internet is managed by two classes of providers: internet service providers (ISPs) catering to retail customers; and internet backbone providers (IBPs) serving large organizations and ISPs on long-haul routes. IBPs, facing excessive capacity and pricing pressure, have started offering content delivery network (CDN) services for content providers. We model the market competition on the CDN services as sequential games, and the aim is to study the game equilibriums by considering factors such as market share, cost structure, product pricing, and consumer preference. We prescribe conditions under which the content provider should choose an IBP over a traditional CDN operator; we also show how the IBP's venture into CDN could affect its interconnection relationship with downstream ISPs.