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.

An economic analysis of microcredit lending

This study explores a number of the issues around the provision of micro-loans by credit unions and the agencies with which they work. One of the issues is how information asymmetry in the provision of microcredit and the resulting rationing of credit to low collateral entrepreneurs are addressed by the bundling of microcredit with the provision of non-financial services (e.g., mentoring). The other issue of interest is the advantages and disadvantages of investor-owned firms (IOFs) -- e.g., chartered banks -- versus credit unions in providing microcredit. Two models of the credit market with both adverse selection and moral hazard are set up to analyze credit rationing of low collateral entrepreneurs and the potential role of non-financial services as a selection instrument in mitigating information asymmetry. The first model investigates the situation where entrepreneurs cannot be distinguished by wealth and the second model looks at the situation where entrepreneurs cannot be distinguished by entrepreneurial skill. A model of a monopoly credit union is developed to examine whether credit unions have advantages over IOFs in providing microcredit. By offering a community investment saving deposit program, the credit union has access to loan funds for microcredit at below-market rates of interest. The model takes into account both pecuniary and non-pecuniary incentives of savers for participating in the saving program. A key result is that with information asymmetry, a perfectly competitive credit market will not produce the first-best efficient level of investment when collateralizable wealth is unavailable. Micro-entrepreneurs with insufficient collateral face credit rationing. Rationing arises because, in a perfectly competitive credit market, the collateral constraint limits lenders' ability to design a set of incentive-compatible contracts. In response, lenders randomize the credit delivered under the contract designed for the low collateral entrepreneurs to deter other entrepreneurs from choosing it. The smaller is the collateralizable wealth of the low collateral entrepreneurs, the greater is the credit rationing that occurs. This study provides a new explanation for the provision of non-financial services such as mentoring along with microcredit. Non-financial services have traditionally been seen as a way of providing training to borrowers and increasing the likelihood of them repaying their loans. The research in this thesis demonstrates that non-financial services can play a role in having borrowers select the types of loans they wish to obtain. The resulting separation means that the resources designated for micro-entrepreneurs will not be used by other entrepreneurs. The bundling of micro-loans with the provision of non-financial services imposes extra costs on entrepreneurs that obtain a micro-loan in comparison to a traditional loan. Assuming heterogeneity in the entrepreneurs' costs of obtaining a micro-loan, it is argued that entrepreneurs who are the target clients of microcredit programs incur the lowest cost of obtaining a micro-loan, while other entrepreneurs incur a relatively higher cost of obtaining a micro-loan. If this outcome occurs, then the higher cost discourages the latter from obtaining micro-loans. Thus, the use of non-financial services, along with the interest rate and collateral, in the loan contract results in a perfect separation and a more efficient level of investment. The analysis also suggests that credit unions, in comparison with IOFs, have advantages in providing microcredit to micro-entrepreneurs. Credit unions' advantage stems from their focus on the welfare of their members rather than on the profits earned. The result suggests that credit unions are likely to be more capable of successfully operating a microcredit program than are IOFs. All else equal, credit unions are able to obtain greater support from their saver members, and thus have more loan funds available for delivering microcredit. The result also suggests that the member orientation of a credit union can create a deadweight loss -- the stronger the credit union prefers one member group over the other group, the greater is the deadweight loss -- and thus have an impact on both the total benefits for members and the distribution of the benefits between micro-loan borrower members and saver members. Despite this, the presence of a credit union leads to a better outcome in terms of both the level of investment that is financed and the benefits to borrowers and savers

Net Neutrality on the Internet: A Two-sided Market Analysis

We discuss the benefits of net neutrality regulation in the context of a two-sided market model in which platforms sell Internet access services to consumers and may set fees to content and applications providers “on the other side” of the Internet. When access is monopolized, we find that generally net neutrality regulation (that imposes zero fees “on the other side” of the market) increases total industry surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content and applications providers. Similarly, we find that imposing net neutrality in duopoly increases total surplus compared to duopoly competition between platforms that charge positive fees on content providers. We also discuss the incentives of duopolists to collude in setting the fees “on the other side” of the Internet while competing for Internet access customers. Additionally, we discuss how price and non-price discrimination strategies may be used once net neutrality is abolished. Finally, we discuss how the results generalize to other two-sided markets.net neutrality, two-sided markets, Internet, monopoly, duopoly, regulation, discrimination

Communication perspectives on social networking and citizen journalism challenges to traditional newspapers

Communication perspectives are presented on the challenges posed to traditional newspapers by social media and citizen journalism, with special reference to the United States. This is an important topic given the critical role investigative reporting, long the domain of newspapers, plays in fostering democratic practices. New Media and social networking technology are evaluated in terms of their impact on the newspaper enterprise. Alternative scenarios for future developments are examined as are the implications for social values and the role of an informed citizenry in democratic society. Strategic management issues are analyzed, and the possibility is considered that social media can fulfill much of the democracy-enhancing role served traditionally by newspapers. --Newspapers,news industry,social media,social networks,democracy,journalism

Net Neutrality on the Internet : a Two-sided Market Analysis

Two-sided market model in which platforms sell Internet access services to consumers and may set fees to content and applications providers 'on the other side' of the Internet. When access is monopolized, we find that generally net neutrality regulation (that imposes zero fees 'on the other side' of the market) increases total industry surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content and applications providers. Similarly, we find that imposing net neutrality in duopoly increases total surplus compared to duopoly competition between platforms that charge positive fees on content providers. We also discuss the incentives of duopolists to collude in setting the fees 'on the other side' of the Internet while competing for Internet access customers. Additionally, we discuss how price and non-price discrimination strategies may be used once net neutrality is abolished. Finally, we discuss how the results generalize to other two-sided markets

Bridging the Innovation Divide: An Agenda for Disseminating Technology Innovations within the Nonprofit Sector

Examines technology practices -- such as neighborhood information systems, electronic advocacy, Internet-based micro enterprise support, and digital inclusion initiatives -- that strengthen the capacity of nonprofits and community organizations

Stop the Abuse of Gmail!

Gmail, a highly anticipated webmail application made by Google, has been criticized by privacy advocates for breaching wiretapping laws, even before its release from beta testing. Gmail\u27s large storage space and automated processes developed to scan the content of incoming messages and create advertisements based on the scanned terms have enraged privacy groups on an international level. This iBrief will compare Gmail\u27s practices with its peers and conclude that its practices and procedures are consistent with the standards of the webmail industry. The iBrief will then propose additional measures Gmail could institute to further protect webmail users\u27 and alleviate the concerns of privacy advocates