nep-net New Economics Papers
on Network Economics
Issue of 2007‒06‒18
eight papers chosen by
Yi-Nung Yang
Chung Yuan Christian University

  1. Service Bundling and the Role of Access Charge in the Broadband Internet Service Market By SHIM, Sunghee; OH, Jungsuk
  2. DRMs, Innovation and Creation By BOMSEL, Olivier; GEFFROY, Anne-Gaëlle
  3. Monopoly pricing of social goods By Sääskilahti, Pekka
  4. Bicriterion a priori route choice in stochastic time-dependent networks. By Nielsen, Lars Relund; Andersen, Kim Allan; Pretolani, Daniele
  5. A note on “Multicriteria adaptive paths in stochastic, time-varying networks” By Pretolani, Daniele; Nielsen, Lars Relund; Andersen, Kim Allan
  6. Triple Play Time By CRAMPES, Claude; HOLLANDER, Abraham
  7. Optimal Bundle of Multimedia Services in Emerging Mobile Markets By NAM, ChanGi; KIM, SeongCheol; CHO, DeockHee; LEE, HyeongJik
  8. Six Degrees of Separation : Operational Separation as a Remedy in European Telecommunications Regulation By CAVE, Martin

  1. By: SHIM, Sunghee; OH, Jungsuk
    Abstract: Using the classical Hotelling model, this paper analyzes the incentive for a CATV service provider to bundle broadband internet services when entering the broadband internet services market. In addition, the effect of such service bundling by an entrant on the market incumbent with ownership over existing bottleneck facilities is analyzed. Furthermore, an access charge that maximizes social welfare is explored and determined. Two cases are considered: in the first case, the market is fully covered; and in the second case, the market is not fully covered. With full market coverage, an entrant has an incentive for service bundling if there is sufficient service differentiation. The entrant's bundling strategy reduces the incumbent's profit. In this case, the total social welfare is independent of the level of the access charge and only has an effect of redistributing the net surplus between consumers and the incumbent. With partial market coverage, the entrant has an incentive for service bundling at a low access charge. The incumbent's profit increases if the access charge is higher than the cost of access provisioning. In this case, the total social welfare is dependent on the level of access charge and the welfare maximizing access charge is less than the unit cost of providing access.
    Keywords: cable TV; broadband internet service; bundling; access charge; convergence.
    JEL: D45 L86 K21 L82 D42 K23 L96 L43
    Date: 2006–09
  2. By: BOMSEL, Olivier; GEFFROY, Anne-Gaëlle
    Abstract: DRMs are intellectual property institutions. They transpose the empirical principle of copyright, which implicitly recognizes that specific ownership rules should be attached to non scientific creation, into the digital era. The legal protection of DRMs, a private means of enforcing content excludability, participates in the "privatization" of copyright protection. This, in turn, means that a proprietary software — governed by intellectual property rights, reinforced by public law — becomes the key to the vertical relations shaped by exclusive copyright. DRMs consequently represent a major stake in the competition to capture network effects in the content distribution vertical chain
    Keywords: copyright; distribution; DRMs; network effects
    JEL: D43 D62 L96 K21
    Date: 2006–06
  3. By: Sääskilahti, Pekka
    Abstract: We analyse the roles of social network topology and size on the monopoly pricing of network goods in a market, where consumers interact with each other and are characterised by their social relations. The size effect is the well-known network externalities phenomenon, while the topological effect has not been previously studied in this context. The topological effect works against, and dominates, the size effect in monopoly pricing by reducing the monopoly's capacity to extract consumer surplus. Under asymmetric information about consumer types, the monopoly prefers symmetric network topologies, but the social optimum is an asymmetric network.
    Keywords: social relations; networks; coordination; monopoly
    JEL: L14 D42 D82
    Date: 2007
  4. By: Nielsen, Lars Relund (Research Unit of Statistics and Decision Analysis); Andersen, Kim Allan (Department of Management Science and Logistics, Aarhus School of Business); Pretolani, Daniele (Department of Sciences and Methods of Engineering)
    Abstract: In recent years there has been a growing interest in using stochastic time-dependent (STD) networks as a modelling tool for a number of applications within such areas as transportation and telecommunications. It is known that an optimal routing policy does not necessarily correspond to a path, but rather to a time-adaptive strategy. In some applications, however, it makes good sense to require that the routing policy corresponds to a loopless path in the network, that is, the time-adaptive aspect disappears and a priori route choice is considered. <p> In this paper we consider bicriterion a priori route choice in STD networks, i.e. the problem of finding the set of efficient paths. Both expectation and min-max criteria are considered and a solution method based on the two-phase approach is devised. Experimental results reveal that the full set of efficient solutions can be determined on rather large test instances, which is in contrast to previously reported results for the time-adaptive case
    Keywords: Stochastic time-dependent networks; Bicriterion shortest path; A priori route choice; Two-phase method
    Date: 2006–09–18
  5. By: Pretolani, Daniele (Department of Sciences and Methods of Engineering); Nielsen, Lars Relund (Research Unit of Statistics and Decision Analysis); Andersen, Kim Allan (Department of Business Studies, Aarhus School of Business)
    Abstract: In a recent paper, Opasanon and Miller-Hooks study multicriteria adaptive paths in <p> stochastic time-varying networks. They propose a label correcting algorithm for finding the full set of efficient strategies. In this note we show that their algorithm is not correct, since it is based on a property that does not hold in general. Opasanon and Miller-Hooks also propose an algorithm for solving a parametric problem. We give a simplified algorithm which is linear in the input size.
    Keywords: Multiple objective programming; shortest paths; stochastic time-dependent networks; time-adaptive strategies
    Date: 2006–11–17
  6. By: CRAMPES, Claude; HOLLANDER, Abraham
    Abstract: Abstract: Digital convergence thrusts telephony, television and the internet into the socalled 'triple play' offerings, creating new forms of rivalry between cable operators and telephone companies. Markets participants feel compelled to enter new industries to survive, even though their core competencies are limited to their primary market. The outcome of triple play competition is likely to depend on the speed of the development of new technologies and the adaptation of the regulatory environment. In the short run, telephone companies will enjoy an advantage attributable to switching costs. However, this advantage will erode as younger subscribers switch to telephony on the internet.
    Keywords: triple play; bundling; digital convergence; broadband access; television and telephone
    JEL: O33 L86 L82 O14 L88 H41 K23 L96
    Date: 2006–09
  7. By: NAM, ChanGi; KIM, SeongCheol; CHO, DeockHee; LEE, HyeongJik
    Abstract: Although various emerging technologies have been launched, they present limitations as far as offering full-scale ubiquitous services independently is concerned. In view of this fact, service providers are likely to provide bundled services among possible combinations of services. Indeed, making a timely decision regarding the value maximization of bundled service is directly related to service providers' future growth and success in the turbulent market environment. This paper aims to find the optimal service bundle among five emerging mobile services: T-DMB, S-DMB, WiBro, HSDPA, and Telematics. Considering what kinds of service features among the five emerging services offer differentiation to customers, we examine four attributes (TV, voice, portable wireless internet, and location-based services) using conjoint analysis to distinguish the service features. Our results show that TV service is the most favored among the attributes, followed by voice service in second position, and the internet and location-based service in third and fourth place respectively. Our result implies that mobile operators would be better off bundling HSDPA and S-DMB first, and then adding other services later, while fixed operators would be better off bundling WiBro and S-DMB first and other services later.
    Keywords: telecommunications and broadcasting convergence; emerging service; 4G Technology; T-DMB; S-DMB; WiBro; HSDPA; telematics; customer preference.
    JEL: H23 K21 L82 L96
    Date: 2006–09
  8. By: CAVE, Martin
    Abstract: Numerous proposals have been made for separation in the telecommunications sector, some of which have been implemented, including the break-up of the Bell system in the 1980s and the widespread implementation of accounting separation. In recent years, attention has been focussed on operational separation. This paper identifies the problem that this is intended to tackle, lists a number of possible variants and discusses experiences in the UK. Having specified the circumstances under which operational separation may be justified, it suggests how provisions for such separation could be made in European legislation.
    Keywords: telecomunications; regulation; operational separation.
    JEL: L51 L41 L96 L43
    Date: 2006–12

This nep-net issue is ©2007 by Yi-Nung Yang. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.