Network monitors and contracting systems: competition and innovation

Today's Internet industry suffers from several well-known pathologies, but none is as destructive in the long term as its resistance to evolution. Rather than introducing new services, ISPs are presently moving towards greater commoditization. It is apparent that the network's primitive system of contracts does not align incentives properly. In this study, we identify the network's lack of accountability as a fundamental obstacle to correcting this problem: Employing an economic model, we argue that optimal routes and innovation are impossible unless new monitoring capability is introduced and incorporated with the contracting system. Furthermore, we derive the minimum requirements a monitoring system must meet to support first-best routing and innovation characteristics. Our work does not constitute a new protocol; rather, we provide practical and specific guidance for the design of monitoring systems, as well as a theoretical framework to explore the factors that influence innovation.