Large traffic generators and network usage: myths and realities

Digital ecosystem players and policymakers have been engaging in discussions over the viability of proposed payments for network use from large internet traffic generators (LTGs) to network operators and internet service providers (ISPs). Payments have been proposed as a market-based solution that could improve consumer outcomes and help achieve investments, connectivity and digital society goals.

We examine the economic case for a potential market-based solution where LTGs face a price signal for the usage of the public network. By focusing on a general principle rather than a specific scheme design, we review the potential of payments as an instrument to improve economic efficiency, which could translate into improved consumer and societal outcomes, such as greater network quality, increased innovation and a general improvement in the pace of digitalisation and the benefits this brings to society. We conclude that under the current regulatory framework, the outcome can be sub-optimal due to insufficient incentives for LTGs to use networks efficiently.