© 2012

Network Economics and the Allocation of Savings

A Model of Peering in the Voice-over-IP Telecommunications Market


  • First analysis of the VoIP Telecommunications Market Network-based framework of interconnection savings

  • Innovative n-player model of interconnection, including long distance and termination fees

  • Contains a concise over view of the methods of game theory and network theory

  • Contains a short overview of the liberalization of telecommunications markets in the 1980s and 1990s


Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 653)

Table of contents

  1. Front Matter
    Pages i-xv
  2. Selected Theoretical Concepts

    1. Front Matter
      Pages 7-7
    2. Philipp Servatius
      Pages 1-6
    3. Philipp Servatius
      Pages 9-118
    4. Philipp Servatius
      Pages 119-155
  3. Applications to Peering in Telecommunications

    1. Front Matter
      Pages 157-157
    2. Philipp Servatius
      Pages 159-177
    3. Philipp Servatius
      Pages 179-234
    4. Philipp Servatius
      Pages 235-267
    5. Philipp Servatius
      Pages 273-285
  4. Back Matter
    Pages 287-297

About this book


This book provides a game theoretic model of interaction among VoIP telecommunications providers regarding their willingness to enter peering agreements with one another. The author shows that the incentive to peer is generally based on savings from otherwise payable long distance fees. At the same time, termination fees can have a countering and dominant effect, resulting in an environment in which VoIP firms decide against peering. Various scenarios of peering and rules for allocation of the savings are considered. The first part covers the relevant aspects of game theory and network theory, trying to give an overview of the concepts required in the subsequent application. The second part of the book introduces first a model of how the savings from peering can be calculated and then turns to the actual formation of peering relationships between VoIP firms. The conditions under which firms are willing to peer are then described, considering the possible influence of a regulatory body.


Game Theory Interconnection Network Theory Peering VoIP - Voice over Internet Protocol

Authors and affiliations

  1. 1., Department Quantitative EconomicsUniversité de FribourgFribourgSwitzerland

About the authors

Philipp Servatius took up employment in the private sector after being awarded his doctorate from the Department of Quantitative Economics at the University of Fribourg. He now works as analyst for a global reinsurer and lives in Zurich and Fribourg, Switzerland.

Bibliographic information

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