Network Neutrality or Internet Innovation?

Over the past two decades, the Internet has undergone an extensive re-ordering of its topology that has resulted in increased variation in the price and quality of its services. Innovations such as private peering, multihoming, secondary peering, server farms, and content delivery networks have caused the Internet’s traditionally hierarchical architecture to be replaced by one that is more heterogeneous. Relatedly, network providers have begun to employ an increasingly varied array of business arrangements and pricing. This variation has been interpreted by some as network providers attempting to promote their self interest at the expense of the public. In fact, these changes reflect network providers’ attempts to reduce cost, manage congestion, and maintain quality of service. Current policy proposals to constrain this variation risk harming these beneficial developments.

The durable internet: preserving network neutrality without regulation

An important reason for the Internet\u27s remarkable growth over the last quarter century is the "end-to-end" principle that networks should confine themselves to transmitting generic packets without worrying about their contents. Not only has this made deployment of internet infrastructure cheap and efficient, but it has created fertile ground for entrepreneurship. On a network that respects the end-to-end principle, prior approval from network owners is not needed to launch new applications, services, or content. In recent years, self-styled "network neutrality" activists have pushed for legislation to prevent network owners from undermining the end-to end principle. Although the concern is understandable, such legislation would be premature. Physical ownership of internet infrastructure does not translate into a practical ability to control its use. Regulations are unnecessary because even in the absence of robust broadband competition, network owners are likely to find deviations from the end-to-end principle unprofitable

Network Neutrality or Internet Innovation?

Over the past two decades, the Internet has undergone an extensive re-ordering of its topology that has resulted in increased variation in the price and quality of its services. Innovations such as private peering, multihoming, secondary peering, server farms, and content delivery networks have caused the Internet’s traditionally hierarchical architecture to be replaced by one that is more heterogeneous. Relatedly, network providers have begun to employ an increasingly varied array of business arrangements and pricing. This variation has been interpreted by some as network providers attempting to promote their self interest at the expense of the public. In fact, these changes reflect network providers’ attempts to reduce cost, manage congestion, and maintain quality of service. Current policy proposals to constrain this variation risk harming these beneficial developments

Network Neutrality, Consumers, and Innovation

In this Article, Professor Christopher Yoo directly engages claims that mandating network neutrality is essential to protect consumers and to promote innovation on the Internet. It begins by analyzing the forces that are placing pressure on the basic network architecture to evolve, such as the emergence of Internet video and peer-to-peer architectures and the increasing heterogeneity in business relationships and transmission technologies. It then draws on the insights of demand-side price discrimination (such as Ramsey pricing) and the two-sided markets, as well as the economics of product differentiation and congestion, to show how deviating from network neutrality can benefit consumers, a conclusion bolstered by the empirical literature showing that vertical restraints tend to increase rather than reduce consumer welfare. In fact, limiting network providers’ ability to vary the prices charged to content and applications providers may actually force consumers to bear a greater proportion of the costs to upgrade the network. Restricting network providers’ ability to experiment with different protocols may also reduce innovation by foreclosing applications and content that depend on a different network architecture and by dampening the price signals needed to stimulate investment in new applications and content. In the process, Professor Yoo draws on the distinction between generalizing and exemplifying theory to address some of the arguments advanced by his critics. While the exemplifying theories on which these critics rely are useful for rebutting calls for broad, categorical, ex ante rules, their restrictive nature leaves them ill suited to serve as the foundation for broad, categorical ex ante mandates pointing in the other direction. Thus, in the absence of some empirical showing that the factual preconditions of any particular exemplifying theory have been satisfied, the existence of exemplifying theories pointing in both directions actually supports an ex post, case-by-case approach that allows network providers to experiment with different pricing regimes unless and until a concrete harm to competition can be shown

Network Neutrality, Consumers, and Innovation

In this Article, Professor Christopher Yoo directly engages claims that mandating network neutrality is essential to protect consumers and to promote innovation on the Internet. It begins by analyzing the forces that are placing pressure on the basic network architecture to evolve, such as the emergence of Internet video and peer-to-peer architectures and the increasing heterogeneity in business relationships and transmission technologies. It then draws on the insights of demand-side price discrimination (such as Ramsey pricing) and the two-sided markets, as well as the economics of product differentiation and congestion, to show how deviating from network neutrality can benefit consumers, a conclusion bolstered by the empirical literature showing that vertical restraints tend to increase rather than reduce consumer welfare. In fact, limiting network providers’ ability to vary the prices charged to content and applications providers may actually force consumers to bear a greater proportion of the costs to upgrade the network. Restricting network providers’ ability to experiment with different protocols may also reduce innovation by foreclosing applications and content that depend on a different network architecture and by dampening the price signals needed to stimulate investment in new applications and content. In the process, Professor Yoo draws on the distinction between generalizing and exemplifying theory to address some of the arguments advanced by his critics. While the exemplifying theories on which these critics rely are useful for rebutting calls for broad, categorical, ex ante rules, their restrictive nature leaves them ill suited to serve as the foundation for broad, categorical ex ante mandates pointing in the other direction. Thus, in the absence of some empirical showing that the factual preconditions of any particular exemplifying theory have been satisfied, the existence of exemplifying theories pointing in both directions actually supports an ex post, case-by-case approach that allows network providers to experiment with different pricing regimes unless and until a concrete harm to competition can be shown

Innovations in the Internet’s Architecture that Challenge the Status Quo

The current debate over broadband policy has largely overlooked a number of changes to the architecture of the Internet that have caused the price paid by and quality of service received by traffic traveling across the Internet to vary widely. Topological innovations, such as private peering, multihoming, secondary peering, server farms, and content delivery networks, have caused the Internet’s traditionally hierarchical architecture to be replaced by one that is more heterogeneous. Moreover, network providers have begun to employ an increasingly varied array of business arrangements. Some of these innovations are responses to the growing importance of peer-to-peer technologies. Others, such as paid peering and partial transit, are driven by the growing dominance of advertising-based business models as well as the insights provided by the economics of two-sided markets. At times interpreted as network providers’ attempts to promote their self interest at the expense of the public, these changes often reflect network providers’ attempts to reduce cost, manage congestion, and maintain quality of service. As such, they have the potential to yield substantial benefits both to individual consumers and to society as a whole

The television struggle : an assessment of over-the-top television evolutions in a cable dominant market

Traditional television screens have lost their monopoly on television content. With a helping hand of digitalization, the introduction of ever more screens in our lives and increasingly faster network technologies, a wide variety of alternative screens and sources of television content are trying to conquer a piece of the audiences' viewing time. This evolution calls for new kinds of services and has the potential to change the current television market. This paper assesses the evolution of over-the-top television services in Flanders, a cable dominant market in which several OTT TV services emerged during the past two years. By presenting an analysis of the market and the results of a large scale end-user survey (n: 1,269) we provide insights on the future of OTT TV and its impact on the current television ecosystem. In the Flemish market, both traditional broadcasters, the channels themselves and new market entrants are launching OTT TV services. These market evolutions are being related to user expectations and usage patterns in order to assess the challenges for future television. This also allows to make assumptions on future scenarios regarding so-called "cord- cutting" behaviour. Because of the high adoption of triple play bundles and fierce competition between the two dominant television distributors, a large scale video cord-cutting scenario is highly unlikely for the Flemish television market. Although OTT TV might gain importance, it will be hard for 'OTT TV-only' services to replace the traditional television distributors

Net Neutrality and Nondiscrimination Norms in Telecommunications: A Historical Perspective

“Net neutrality” refers to the principle that broadband providers should not discriminate when transporting content and applications over the Internet. After several years of debate, the Federal Communications Commission adopted binding net neutrality rules in December 2010. The cornerstone of this regime is a binding rule that forbids broadband providers from unreasonably discriminating when delivering Internet traffic.The prohibition on unreasonable discrimination has a long pedigree in telecommunications law, and net neutrality proponents have long asserted the need to extend that nondiscrimination norm to cyberspace. But the Commission’s net neutrality rules impose far greater obligations on broadband providers than the law ever imposed on other telecommunications companies. This expansive reach is particularly surprising given the fact that most broadband markets do not exhibit the characteristics that have historically triggered strict nondiscrimination obligations. While the Commission has pursued the laudatory goal of protecting consumers, its rules have the unintended consequence of stifling innovation in the broadband industry. A more nuanced, modest set of restrictions grounded in the Commission’s traditional nondiscrimination rules would be far superior policy, and would reflect the learned wisdom of seventy-five years of telecommunications law

It's Working: How the Internet Access and Online Video Markets Are Thriving in the Title II Era

Financial and marketplace evidence demonstrates that the FCC's 2015 Open Internet Order is an absolute success, accomplishing its stated goal of preserving and promoting the online ecosystem's "virtuous cycle of investment." ISP investments accelerated following the vote (e.g., aggregate capital expenditures by publicly traded ISPs have risen by more than 5 percent during the two-year period since the FCC's February 2015 vote; investments in core network technology at cable companies during that same time period are up by more than 48 percent). Investments in the edge, including those by online video providers and edge computing firms, are up as well (e.g., capital expenditures by firms in the U.S. data-processing sector increased 26 percent in the year following the FCC's order while there was just 4 percent growth in the year prior). More new U.S. "over-the-top" video services launched in the two years following the vote than in the seven years prior. Furthermore, the certainty the FCC's action created spurred the entry of numerous pay-TV full replacement providers, with vertical carriers such as AT&T now distributing (and others poised to distribute) their pay- TV services via other ISPs' last mile networks.In sum, the 2015 Open Internet Order and accompanying legal classification decision settled the prior uncertainty about open, nondiscriminatory broadband telecom service access. What followed that decision was a historic period of U.S. investment and innovation