Linking interdomain business models to the current Internet topology

The Internet is built on a model in which Autonomous Systems (AS) peer bilaterally based on pair-wise Service Level Agreements (SLA). This results in a cascaded connectivity model in which routing decisions beyond the next hop are delegated, so an AS has limited control over paths beyond the next hop. While this is a key feature of the Internet, the impact of this cascading model on the structure of the Internet has, to the best of our knowledge, never been analyzed in detail. Using game theory with realistic rules, we provide an analysis of the cascading model. Although our model does not intend to capture the full economic and technical complexity of the real Internet, we show that it exposes the two main business models of peering used currently: volume-based peering and transit carriers (large hubs with equivalent capacity).