Study on the contract characteristics of Internet architecture

Abstract

The importance of Internet architecture goes beyond the technical aspects. The architecture of Internet has a profound influence on the Internet-based economy in term of how the profits are shared by different market participants (Internet Server Provider, Internet Content Provider), since it is the physical foundation upon which the profit-sharing contracts are derived. In order to facilitate the continuing growth of the Internet, it is necessary to systematically study factors that curtail the Internet-based economy including the existing Internet architecture. In this paper, we used transaction cost economics and contract economics as new tools to analyse the contracts derived from the current Internet architecture. This study sheds light on how the macro characteristics of Internet architecture effect the microeconomical decisions of market participants. Based on the existing Internet architecture, we discuss the possibility of promoting Internet-based economy by encouraging user to connect their private stub network to the Internet and giving the user more right of self-governing.

Keywords:

• network architecture
• IPVN
• institutional economics
• bilateral regulation
• Named Data Networking
• IoT

Acknowledgements

This work is supported by the Hi-Tech Research and Development Program of China (863) under grant No. 2008AA01Z203 and by the Beijing Natural Science Foundation under Grant No. 4112057. The authors would like to thank Professor Jing Yang's continuous guide to this research and enlighten us. In the study, he helped us make the target clear and definite.

Notes

^†The data in this article are only used to illustrate how contract relationships affect profit-sharing

1. Metcalfe Law proposed by Robert Metcalfe is that network value is proportional to the square of user amount. Robert Metcalfe is the founder of 3Com Corporation and a pioneer in computer networks.

2. 2009 Nobel Laureate in economics, for his ‘analysis of economic governance, especially for the company's economic governance border’.

3. The concept of transaction costs does not refer exclusively to minimising the economic transaction cost; it can also refer to maximising the profits from decision, or the optimisation of decision arrangements form. Moreover, the ‘decision’ does not necessarily have economic attributes because not all the decisions are on purpose of transaction. The target of institutional economic analysis is not only concerned about the economic transactions, but also about other ‘social behaviours’. Economic transaction is only a special social transaction.