Why Imposing New Tolls on Third-Party Content and Applications Threatens Innovation and Will Not Improve Broadband Providers’ Investment

While some broadband providers have called Internet content and application providers free riders on their infrastructure, this is incorrect and misguided. End-users pay for their residential broadband providers for access to the Internet, and content providers pay their own ISPs for connectivity as well. However, content providers need not pay residential broadband providers’ ISPs in order to reach their customers. This feature of the Internet has been one key factor that has allowed innovation to prosper and kept barriers to entry low, as the network transport market for content and application providers functions relatively efficiently. In this paper, I consider the impact of a departure from this current system. I examine the possible impact of last-mile broadband providers’ imposing “termination fees” on third-party content providers or application providers to reach end-users. Broadband providers would engage in paid prioritization arrangements – that is, application and content providers could pay the broadband provider to have their traffic prioritized over competitors’ services. I argue that these arrangements would create inefficiency in the market and harm innovation. Because the last mile access broadband market is concentrated and consumers face switching costs, these concerns are particularly significant. Broadband providers insist that imposing these new charges will greatly improve network investment, and thus these charges are beneficial. I argue that this is not the case. Possible higher revenues from discrimination may simply be returned to shareholders and not invested. Additionally, evidence suggests networks invest more under non-discrimination requirements, and paid prioritization schemes would divert money towards managing scarcity instead of expanding capacity. Paid prioritization could even create an incentive for broadband providers to create congestion to increase the price of prioritized service.

Assessing the Current State of Net Neutrality and Exploring Solutions in Creating and Maintaining Open, Available, and Innovative Internet and Broadband Services

This article examines the current state of net neutrality regulation in the United States. Debates surrounding net neutrality are varied and layered. They include legal questions regarding how the internet should be classified under existing statutes, and the level of authority for federal agencies when regulating internet service providers. The Article will provide an extensive background of net neutrality in the United States, discussing the pertinent case law and legislation that shaped the modern Internet regulatory landscape. It will conclude by discussing the current state of the law, focusing on the perspectives of proponents and opponents of the law as it currently stands under the Restoring Internet Freedom Order. Finally, it will analyze examples of measures that opponents of the Restoring Internet Freedom Order are taking to repeal it

Why Imposing New Tolls on Third-Party Content and Applications Threatens Innovation and Will Not Improve Broadband Providers’ Investment

While some broadband providers have called Internet content and application providers free riders on their infrastructure, this is incorrect and misguided. End-users pay for their residential broadband providers for access to the Internet, and content providers pay their own ISPs for connectivity as well. However, content providers need not pay residential broadband providers’ ISPs in order to reach their customers. This feature of the Internet has been one key factor that has allowed innovation to prosper and kept barriers to entry low, as the network transport market for content and application providers functions relatively efficiently. In this paper, I consider the impact of a departure from this current system. I examine the possible impact of last-mile broadband providers’ imposing “termination fees” on third-party content providers or application providers to reach end-users. Broadband providers would engage in paid prioritization arrangements – that is, application and content providers could pay the broadband provider to have their traffic prioritized over competitors’ services. I argue that these arrangements would create inefficiency in the market and harm innovation. Because the last mile access broadband market is concentrated and consumers face switching costs, these concerns are particularly significant. Broadband providers insist that imposing these new charges will greatly improve network investment, and thus these charges are beneficial. I argue that this is not the case. Possible higher revenues from discrimination may simply be returned to shareholders and not invested. Additionally, evidence suggests networks invest more under non-discrimination requirements, and paid prioritization schemes would divert money towards managing scarcity instead of expanding capacity. Paid prioritization could even create an incentive for broadband providers to create congestion to increase the price of prioritized service.Network Neutrality, Internet, Market Power, Discrimination, Two-Sided Market, Prioritization, Broadband, Termination Fees

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

Broadband Openness Rules Are Fully Justified by Economic Research

This paper responds to arguments made in filings in the FCC’s broadband openness proceeding (GN Dkt. 09-191) and incorporates data made available since my January 14th filing in that proceeding. Newly available data confirm that there is limited competition in the broadband access marketplace. Contrary to some others’ arguments, wireless broadband access services are unlikely to act as effective economic substitutes for wireline broadband access services (whether offered by telephone companies or cable operators) and instead are likely to act as a complement. Nor will competition in the Internet backbone marketplace constrain broadband providers’ behavior in providing “last mile” broadband access services. The last mile, concentrated market structure, combined with high switching costs, provides last mile broadband network providers with the ability to engage in practices that will reduce social welfare in the absence of open broadband rules. Furthermore, the effect of open broadband rules on broadband provider revenues is likely to be small and can be either positive or negative. Unfortunately, various filings have misstated or mischaracterized the results on the economics of two-sided markets. Contrary to what some have argued, allowing broadband providers to charge third party content providers will not necessarily result in lower prices being charged to residential Internet subscribers. This is true under a robust set of assumptions. Despite some parties’ mischaracterization of the economic literature, price discrimination by broadband providers against third party applications and content providers will reduce societal welfare for numerous reasons. This reduction in societal welfare is especially acute when price discrimination is taken to the extreme of exclusive dealing between broadband providers and content providers. Antitrust and consumer protection laws are insufficient to protect societal welfare in the absence of open broadband rules.Network Neutrality, Internet, Discrimination, Prioritization, Two-Sided Market, Market Power, Termination Fee, Broadband

Broadband Openness Rules Are Fully Justified by Economic Research

This paper responds to arguments made in filings in the FCC’s broadband openness proceeding (GN Dkt. 09-191) and incorporates data made available since my January 14th filing in that proceeding. Newly available data confirm that there is limited competition in the broadband access marketplace. Contrary to some others’ arguments, wireless broadband access services are unlikely to act as effective economic substitutes for wireline broadband access services (whether offered by telephone companies or cable operators) and instead are likely to act as a complement. Nor will competition in the Internet backbone marketplace constrain broadband providers’ behavior in providing “last mile” broadband access services. The last mile, concentrated market structure, combined with high switching costs, provides last mile broadband network providers with the ability to engage in practices that will reduce social welfare in the absence of open broadband rules. Furthermore, the effect of open broadband rules on broadband provider revenues is likely to be small and can be either positive or negative. Unfortunately, various filings have misstated or mischaracterized the results on the economics of two-sided markets. Contrary to what some have argued, allowing broadband providers to charge third party content providers will not necessarily result in lower prices being charged to residential Internet subscribers. This is true under a robust set of assumptions. Despite some parties’ mischaracterization of the economic literature, price discrimination by broadband providers against third party applications and content providers will reduce societal welfare for numerous reasons. This reduction in societal welfare is especially acute when price discrimination is taken to the extreme of exclusive dealing between broadband providers and content providers. Antitrust and consumer protection laws are insufficient to protect societal welfare in the absence of open broadband rules.

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