The Economics of Net Neutrality: Implications of Priority Pricing in Access Networks

This work systematically analyzes Net Neutrality from an economic point of view. To this end a framework is developed which helps to structure the Net Neutrality debate. Furthermore, the introduction of prioritization is studied by analyzing potential effects of Quality of Service (QoS) on Content and Service Providers (CSPs) and Internet Users (IUs)

When ‘Just’ is Just Not Enough - Why Consumers Do Not Appreciate Non-Neutral Internet Access Services

Although Internet service providers (ISPs) are technically capable as well as legally allowed to offer non-neutral Internet access services, where the data flows of customers who pay a premium are prioritized over others, such an access service is currently not offered by ISPs. We argue that ISPs are hesitant to tap the price discrimination potential of prioritized Internet access services, because in the context of the ongoing public debate on net neutrality (NN), their customers would consider such differentiation unjust. In a representative survey among German Internet access customers, we find that the customers’ perceptions of justice as well as the framing of the mechanism by which prioritized Internet access is provided are indeed decisive for whether customers would prefer this access regime over NN. In particular, we find that perceptions of distributive and procedural justice influence customers’ choice for non-neutral Internet access. Moreover, customers are more likely to accept a regime that offers an absolute rather than a relative prioritization of data flow

The Role of Self-Control in Self-Tracking

Self-tracking is defined as using technology to monitor one’s own behaviour e.g. sleeping habits or steps. Using established measurements from psychology we investigate how different levels of self-control influence the tracking behaviour of consumers and their expenditures for self-tracking software and hardware. Furthermore, we analyse what motivations to start self-tracking drive different self-tracking activities. To this end we conducted a web-based survey with 130 participants and evaluated our data using PLS-SEM analysis. We find that higher levels of self-control increase the odds of consumers tracking physical parameters and spending more for self-tracking software and hardware. Furthermore, higher impulsivity has a negative effect on the likelihood of tracking medical parameters. Tracking behaviour in general is driven by curiosity. Overall expenditures depend on the usage frequency of self-tracking tools. We conclude that users with low self-control value self-tracking to a lower degree because they are confronted with negative self-tracking results and emotions

Paid Peering and Content Delivery

Recent conflicts between big content and service providers (CSPs) like Netflix, transit providers (TPs), and Internet service providers (ISPs) have generated considerate media attention and ignited a debate on interconnection agreements, market power of last-mile ISPs and net neutrality. We propose an experimental design to analyze a stylized interconnection market that captures key aspects of actual interconnection markets with a focus on the entry of big CSPs. Participants are invited to assume the roles of ISPs, TPs and CSPs in a computer-aided laboratory experiment. The experiment serves to evaluate potential regulatory tools like transparency and interconnection obligation with respect to the efficiency of the overall interconnection market. Furthermore, we present results of a pre-test of the experimental design and the software implementation. Our preliminary results indicate that operators underinvest into network infrastructure and do not realize the full potential of mutual peering agreements when a CSP participates in the market

Raising the Bar The Effect of New and More Appealing Alternatives on User Satisfaction with Incumbent Information Systems

With more and more employees in organizations being digital natives, a workforce emerges, which is familiar with the adoption of new and innovative technology in its private life. Applying the negative cybernetic feedback loop model as our research model, we argue that the knowledge and experience with private alternative system raises the bar for organizational systems. To this end, we address the following question in our study: How is user satisfaction with an incumbent system affected by the introduction of a more appealing alternative? To answer this question, we conducted an online experiment with a representative sample of 292 participants. We show that user satisfaction with an incumbent system is lower when users are familiar with a more appealing system

DATA CAPS AND TWO-SIDED PRICING: EVALUATING MANAGED SERVICE BUSINESS MODELS

With the transition from a flat rate dominated pricing regime towards volume-based tariffs, bandwidth is often bundled with specific allowances or overuse-charges for data consumption. One central element in many new telecommunications tariffs is the implementation of data caps, which are a common tool to address several challenges telecommunications providers face in today´s markets. In this context the recent introduction of so-called managed services , or all-you-can-app offers draws the attention of regulators. The term managed service is coined by operators to describe online-services that have a special agreement with the network operator. These service providers agree to revenu-sharing agreements and in turn their customers are alleviated from counting the data traffic they cause against their monthly quota. In this paper we develop a framework that incorporates the different forms of volume-based Internet tariffs in the market. Furthermore, we present the case of data caps in combination with managed services offers and derive the relevant research qustions. In the following section we discuss the incentives of service providers to become a managed service and outline the creation of a theoretical model to analyze the case of data caps and managed services from an economic perspective. The paper concludes with a brief summary, general implications and a description of how to complete the presented theoretical approach

Network Neutrality and Congesition-Sensitive Content Providers: Implications for Service Innovation, Broadband Investment and Regulation

We model the main arguments of the net neutrality debate in a two-sided market framework with network congestion sensitive content providers and Internet consumers on each side, respectively. The platform is controlled by a monopolistic Internet service provider, who may choose to sell content providers prioritized access to its customers. We explicitly consider the adverse effects of traffic prioritization to the remaining best-effort class and find that network discrimination has overall positive effects on welfare, because congestion is better allocated to those content providers with congestion inelastic advertisement revenues. In the long-run, network discrimination leads to infrastructure investments in transmission capacity and encourages innovation on the content provider side. In the short-run, however, discrimination has no effect on innovation because the ISP expropriates the content providers' increased surplus through the price for priority access. This is the downside of network discrimination: Albeit total welfare is increased, content providers will-at least in the short-run-be worse off than under network neutrality. Although price regulation can shift some of the congestion alleviation gains back to content providers, it is inapt as a policy instrument, because welfare is proportionally destroyed in the process

Network neutrality and congestion sensitive content providers: Implications for content variety, broadband investment and regulation

We study departures from network neutrality through implementing a Quality of Service tiering regime in which an ISP charges for prioritization on a non-discriminatory basis. We find that Quality of Service tiering may be more efficient in the short run, because it better allocates the existing network capacity, and in the long run, because it provides higher investment incentives due to the increased demand for priority services by the entry of new congestion sensitive content providers. Which network regime is the most efficient depends on the distribution of congestion sensitivity among content providers, but a guideline is that the regime that provides higher incentives for infrastructure investments is more efficient in the long run

Network Neutrality and Congestion Sensitive Content Providers: Implications for Service Innovation, Broadband Investment and Regulation

We consider a two-sided market model with a monopolistic Internet Service Provider (ISP), network congestion sensitive content providers (CPs), and Internet customers in order to study the impact of Quality- of-Service (QoS) tiering on service innovation, broadband investments, and welfare in comparison to network neutrality. We find that QoS tiering is the more efficient regime in the short-run. However it does not promote entry by new, congestion sensitive CPs, because the ISP can expropriate much of the CPs' surplus. In the long-run, QoS tiering may lead to more or less broadband capacity and welfare, depending on the competition-elasticity of CPs' revenues