Content Provider Contributions to Capacity Expansion of a Neutral ISP: Effect of Private Option

Increasing content consumption by users and the expectation of a better Internet experience requires Internet service providers (ISPs) to expand the capacity of the access network continually. The ISPs have been demanding the participation of the content providers (CPs) in sharing the cost of upgrading the infrastructure. From CPs’ perspective, investing in the ISP infrastructure, termed as public investment, seems rational as it will boost their profit. However, the CPs can alternatively invest in making content delivery more efficient, termed as private investment, as it also boosts their profit. Thus, in this work, we investigate this trade-off between public and private investment of the CPs for a net-neutral ISP. Specifically, we consider centralized decision and non-cooperative forms of interaction between CPs and an ISP and determine the optimum public and private investments of the CPs for each model. In the non-cooperative interaction, we find that at most one CP contributes to the public infrastructure, whereas all invest in their private infrastructure.