Investigating the role of a transmission initiator in private peering arrangements

This paper investigates the impact of determination of an original initiator of transmission on demand as well as profits of the providers. For that purpose we present a new model, called differentiated traffic-based interconnection agreement (DTIA) that differentiates traffic into two types, referred to as native and stranger in order to determine a transmission initiator. In comparison to the existing financial settlement, under which the payments are based on the net traffic flow, the proposed model governs cost compensation according to the differentiated traffic flows. In addition, a traffic management mechanism that supports the presented approach was described. Analytical studies were provided using Nash bargaining solution to explore how the proposed strategy affects the outcome of providers´ negotiation. The key consequence of the obtained results showed that determination of an initiator of transmission induces providers to receive higher profits.