Net neutrality and high‑speed broadband networks: evidence from OECD countries

Network neutrality regulations are intended to preserve the Internet as a non-discriminatory, public network and an open platform for innovation. Whereas the U.S. reversed its regulations in 2017, returning to a less strict regime, the EU has maintained its course and recently revised implementation guidelines for its strict and rather interventionist net neutrality regulations. To this day, there exist only a few empirical investigations on the impact of network neutrality regulations, based on rather broad measures of investment activities for individual countries. Our paper provides the first estimation results on the causal impact of net neutrality regulations on new high-speed (fiber-optic cable-based) infrastructure investment by Internet service providers. We use a comprehensive and most recent OECD panel data set for 32 countries for the period from 2000 to 2021 covering the entire high-speed broadband network deployment period. We employ various panel estimation techniques, including instrumental variables estimation. Our empirical analysis is based on theoretical underpinnings derived from a simplified model in a two-sided market framework. We find empirical evidence that net neutrality regulations exert a significant and strong negative impact on fiber investments. Our results suggest that, while we cannot provide evidence on the overall welfare consequences of net neutrality, imposing strict net neutrality regulations clearly slow down the deployment of new fiber-based broadband connections

Innovationswirkung der Netzneutralität: statische und dynamische Effekte der Ausgestaltung von Priorisierungsregimen

Regeln zur Netzneutralität werden sowohl in Europa als auch in den USA intensiv diskutiert. Die Arbeit untersucht die ökonomischen Aspekte möglicher Priorisierungsregimen. Basierend auf Erkenntnissen der Theorie der zweiseitigen Märkte und der Industrieökonomik werden allgemeine Aussagen zu möglichen Regulierungsansätzen entwickelt, und es wird gezeigt, welche Implikationen sie für die innerhalb der theoretischen Literatur verwendeten Netzneutralitätsoperationalisierungen besitzen. Ein summarischer Überblick über die vorhandenen Modelle dient zur Herleitung von Folgerungen für eine angemessene Regulierung. Innovationspolitischen Aspekte des Themas werden gesondert untersucht. Die Autorin differenziert zwischen der Wirkung der Netzneutralität auf Innovationsanreize und Innovationsfähigkeit der einzelnen Marktteilnehmer und den einzelnen Innovationsphasen.The Thesis presents different approaches to define network neutrality and their relationship to economic and technical arguments for more discerning treatments of data than mere best effort FiFo. Efficiency arguments for congestion management are analyzed with a focus on empirical trends in internet infrastructure and usage growth. Despite a parallel trend, the addition of bandwidth is no solution for short term usage-peaks which decrease the performance of delay sensitive applications, quality of service minimizes the cost of congestion episodes. Both techniques are essential to optimize performance in the long run. From an economic point of view, the theory of two-sided markets provides strong arguments against a zero price rule. A ban on \emph{access tiering} restricts the ability of internet service providers as platform providers to internalize indirect network effects by choosing the optimal price structure. The analysis of the competition aspect of network neutrality with special regard to the dangers of vertical integration indicates that scenarios in which internet service providers foreclose rivals or charge supra competitive prices do exist. But, they are no reason to introduce neutrality regulation because existing legislation is covering them already. Thus while two-sided market theory actively cautions against zero price rules, the the literature on industrial organization seems to counsel against a general prohibition of vertical integration and prohibitions against quality or price differentiation. Those theoretical conclusions are supplemented by an in depth look at the literature modeling net neutrality. The fact that most of the papers use different assumptions concerning the number of internet service providers, content providers and end users, the possibility and effect of multihoming, even different definitions and consequently different operationalizations of network neutrality is seen as an advantage. It allows to test the robustness of the conclusions on the effect of network neutrality on congestion, investment levels, the number of content providers which serves as a proxy for innovation, welfare in general and its constituents (consumer rents, and internet service provider/content providers-profits). The analysis of the effect of the prioritization regime on innovation first establishes a guesstimate of the magnitude of the effects. Starting from the effect of information and communication technology in general and the impact of the internet on BIP-growth I try to narrow down the effect of the InternetÔs data transmission protocols by identifying possible chains of casualty between innovation inputs, activities, outputs, and impacts and the Internet analyzing the importance of neutral data transmission for each one in turn. This analysis is contrasted with the engineering view on the importance of open protocols and their impact as well as a throughout overview of the literature on the topic and an in depth look at the InternetÔs impact on the global determinants of innovation: technology, demand, innovation-systems and competition. The main contribution of the analysis lies in the the fact that each innovation phase (invention, innovation, diffusion) is analyzed separately, the overall impact of the prioritization regime is understood als the sum of effects during the different phases of the innovation cycle, which makes quantification challenging and cautions against conclusions drawn form the impact of net neutrality on a single phase

Net neutrality discourses: comparing advocacy and regulatory arguments in the United States and the United Kingdom

Telecommunications policy issues rarely make news, much less mobilize thousands of people. Yet this has been occurring in the United States around efforts to introduce "Net neutrality" regulation. A similar grassroots mobilization has not developed in the United Kingdom or elsewhere in Europe. We develop a comparative analysis of U.S. and UK Net neutrality debates with an eye toward identifying the arguments for and against regulation, how those arguments differ between the countries, and what the implications of those differences are for the Internet. Drawing on mass media, advocacy, and regulatory discourses, we find that local regulatory precedents as well as cultural factors contribute to both agenda setting and framing of Net neutrality. The differences between national discourses provide a way to understand both the structural differences between regulatory cultures and the substantive differences between policy interpretations, both of which must be reconciled for the Internet to continue to thrive as a global medium

Net neutrality discourses: comparing advocacy and regulatory arguments in the United States and the United Kingdom

Telecommunications policy issues rarely make news, much less mobilize thousands of people. Yet this has been occurring in the United States around efforts to introduce "Net neutrality" regulation. A similar grassroots mobilization has not developed in the United Kingdom or elsewhere in Europe. We develop a comparative analysis of U.S. and UK Net neutrality debates with an eye toward identifying the arguments for and against regulation, how those arguments differ between the countries, and what the implications of those differences are for the Internet. Drawing on mass media, advocacy, and regulatory discourses, we find that local regulatory precedents as well as cultural factors contribute to both agenda setting and framing of Net neutrality. The differences between national discourses provide a way to understand both the structural differences between regulatory cultures and the substantive differences between policy interpretations, both of which must be reconciled for the Internet to continue to thrive as a global medium

The State of Network Neutrality Regulation

The Network Neutrality (NN) debate refers to the battle over the design of a regulatory framework for preserving the Internet as a public network and open innovation platform. Fueled by concerns that broadband access service providers might abuse network management to discriminate against third party providers (e.g., content or application providers), policymakers have struggled with designing rules that would protect the Internet from unreasonable network management practices. In this article, we provide an overview of the history of the debate in the U.S. and the EU and highlight the challenges that will confront network engineers designing and operating networks as the debate continues to evolve.BMBF, 16DII111, Verbundprojekt: Weizenbaum-Institut für die vernetzte Gesellschaft - Das Deutsche Internet-Institut; Teilvorhaben: Wissenschaftszentrum Berlin für Sozialforschung (WZB)EC/H2020/679158/EU/Resolving the Tussle in the Internet: Mapping, Architecture, and Policy Making/ResolutioNe

Network Neutrality: A Research Guide

The conclusion in a research handbook should emphasise the complexity of the problem than trying to claim a one-size-fits-all solution. I have categorised net neutrality into positive and negative (content discrimination) net neutrality indicating the latter as potentially harmful. Blocking content without informing customers appropriately is wrong: if it says ‘Internet service’, it should offer an open Internet (alongside walled gardens if that is expressly advertised as such). The issue of uncontrolled Internet flows versus engineered solutions is central to the question of a ‘free’ versus regulated Internet. A consumer- and citizen-orientated intervention depends on passing regulations to prevent unregulated nontransparent controls exerted over traffic via DPI equipment, whether imposed by ISPs for financial advantage or by governments eager to use this new technology to filter, censor and enforce copyright against their citizens. Unraveling the previous ISP limited liability regime risks removing the efficiency of that approach in permitting the free flow of information for economic and social advantage. These conclusions support a light-touch regulatory regime involving reporting requirements and co-regulation with, as far as is possible, market-based solutions. Solutions may be international as well as local, and international coordination of best practice and knowledge will enable national regulators to keep up with the technology ‘arms race’