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Internet of Things, future networks, and the economics of virtual networks

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  • Günter Knieps

    (University of Freiburg, Germany)

Abstract

The Internet of Things (IoT) gains momentum. Developments regarding smart grids, intelligent transportation systems, and low-power networks for smart cities constitute significant drivers in the evolution of network industries. IoT creates an array of new requirements for information and communications technology (ICT) data transmission: In addition to real-time and data geopositioning, new service characteristics result from the change of the traditional sender–receiver perspective of Transmission Control Protocol/Internet Protocol (TCP/IP) to content relevancy for many users (e.g. cloud computing) and dynamic changes of the state of devices. The future development and success of IoT hinges critically on the provision of heterogeneous quality of service (QoS) requirements which cannot be provided by best-effort TCP/IP Internet. It is thus not surprising that both in the US and the EU network neutrality regulations are currently being reconsidered. Alternative network logistics (virtual networks) dealing with heterogeneous QoS requirements of network traffic may require fundamental deviations from traditional Internet architectures. Corresponding logistics operating over joint physical infrastructures gain increasing attention under the heading of future networks (FNs). The goal of this article is to focus on the economic mechanisms of how the potentials of QoS differentiation in the context of FNs can be fully exploited and incentivized within innovative all-IP-based QoS traffic architectures.

Suggested Citation

  • Günter Knieps, 2017. "Internet of Things, future networks, and the economics of virtual networks," Competition and Regulation in Network Industries, , vol. 18(3-4), pages 240-255, September.
    • Handle: RePEc:sae:crnind:v:18:y:2017:i:3-4:p:240-255
    DOI: 10.1177/1783591718784398
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    References listed on IDEAS

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    1. Günter Knieps, 2015. "Entrepreneurial Traffic Management And The Internet Engineering Task Force," Journal of Competition Law and Economics, Oxford University Press, vol. 11(3), pages 727-745.
    2. Oecd, 2012. "Machine-to-Machine Communications: Connecting Billions of Devices," OECD Digital Economy Papers 192, OECD Publishing.
    3. Stocker, Volker & Smaragdakis, Georgios & Lehr, William & Bauer, Steven, 2017. "The growing complexity of content delivery networks: Challenges and implications for the Internet ecosystem," Telecommunications Policy, Elsevier, vol. 41(10), pages 1003-1016.
    4. Bauer, Johannes M. & Knieps, Günter, 2018. "Complementary innovation and network neutrality," Telecommunications Policy, Elsevier, vol. 42(2), pages 172-183.
    5. Günter Knieps, 2011. "Network neutrality and the evolution of the internet," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, vol. 2(1), pages 24-38.
    6. Günter Knieps, 2017. "Internet of Things and the economics of smart sustainable cities," Competition and Regulation in Network Industries, , vol. 18(1-2), pages 115-131, March.
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    Cited by:

    1. Stocker Volker & Knieps Guenter, 2018. "Network Neutrality Through the Lens of Network Economics," Review of Network Economics, De Gruyter, vol. 17(3), pages 115-150, September.
    2. Guenter Knieps, 2023. "The Governance of Big Data and Artificial Intelligence in Network Industries," Competition and Regulation in Network Industries, , vol. 24(2-3), pages 57-71, June.
    3. Knieps, Günter & Bauer, Johannes M., 2022. "Internet of things and the economics of 5G-based local industrial networks," Telecommunications Policy, Elsevier, vol. 46(4).
    4. Günter Knieps, 2019. "Internet der Dinge und die Zukunft der Netzökonomie [Internet of Things and the Future of Network Economics]," Wirtschaftsdienst, Springer;ZBW - Leibniz Information Centre for Economics, vol. 99(5), pages 348-354, May.
    5. Richard Lutz & Christian Böttger & Alexander Kirchner & Günter Knieps, 2019. "Deutsche Bahn zwischen Daseinsvorsorge und Gewinn: Ist ein radikaler Umbau nötig?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 72(05), pages 03-16, March.

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