The Shapley Value Mechanism for ISP Settlement

Overview

Within the current Internet, autonomous ISPs implement bilateral agreements, with each ISP establishing agreements that suit its own local objective to maximize its profit. Peering agreements based on local views and bilateral settlements, while expedient, encourage selfish routing strategies and discriminatory interconnections. From a more global perspective, such settlements reduce aggregate profits, limit the stability of routes, and discourage potentially useful peering/ connectivity arrangements, thereby unnecessarily balkanizing the Internet. The paper shows that if the distribution of profits is enforced at a global level, then there exist profit-sharing mechanisms derived from the Shapley value and its extensions that will encourage these selfish ISPs who seek to maximize their own profits to converge to a Nash equilibrium.