Adverse Selection in Fourth Generation Networks: Quality of Service for Entertainment

The mobile communications market is evolving rapidly. Existing communications markets, fixed and mobile, will be integrated in the Fourth Generation environment. This environment is expected to enable the provision of seamless network service that will permit the development of new value added services. Many new such services (e.g. entertainment) have specific network service quality requirements, which make the interconnection of the various access networks a critical factor. Internet experience shows that it is difficult to provide end-to-end service quality. An important reason is information asymmetry. This paper aims to address the problem of information asymmetry in the form of adverse selection and show that simple incentive mechanisms can improve market efficiency.