Title: Towards an Economic Framework for Network Neutrality Regulation.
Abstract: The paper develops an economic framework for network neutrality regulation. Network neutrality rules forbid network operators to discriminate against third-party applications, content or portals or to exclude them from their network. The analysis shows that calls for network neutrality regulation are justified: In the absence of network neutrality regulation, there is a real threat that network providers will discriminate against independent producers of applications, content or portals or exclude them from their network. This threat reduces the amount of innovation in the markets for applications, content and portals at significant costs to society. While network neutrality rules remove this threat, they are not without costs. Due to the potentially enormous benefits of application-level innovation for economic growth, however, increasing the amount of application-level innovation through network neutrality regulation is more important than the costs associated with it. Apart from advancing the debate over network neutrality, the paper highlights important limitations of the “one monopoly rent” argument: It shows that there are more exceptions to the “one monopoly rent” argument than have previously been identified and that these new exceptions may be quite common in the Internet context. It shows that exclusion may be a profitable strategy, even if the excluding actor does not manage to drive its competitors from the complementary market. It also shows that competition in the primary market may not always be sufficient to remove the ability and incentive to engage in exclusionary conduct. 1 Non-Residential Fellow, Center for Internet and Society, Stanford Law School, CA, USA and Senior Researcher, Telecommunication Networks Group, Department of Electrical Engineering and Computer Science, Technical University Berlin, Germany. E-Mail: [email protected] / [email protected]. Thanks to Pio Baake, Yochai Benkler, David Clark, David Isenberg, Bill Lehr, Lawrence Lessig, Robert Pepper, David Reed, Tim Wu, Christopher Yoo and participants of the 33rd Research Conference on Communication, Information and Internet Policy (TPRC 2005), the Berkman Center for Internet and Society Luncheon Series, Harvard Law School, and the MIT Computer Science and Artificial Intelligence Laboratory Speaker Series, Massachusetts Institute of Technology, for comments on an earlier version of this paper and for discussions. Parts of this paper are based on BARBARA VAN SCHEWICK, ARCHITECTURE AND INNOVATION: THE ROLE OF THE END-TO-END ARGUMENTS IN THE ORIGINAL INTERNET, Chapter 9 and Chapter 11 (PhD Dissertation, Technical University Berlin 2005, MIT Press forthcoming 2007), for which financial support of the German National Academic Foundation (“Studienstiftung des Deutschen Volkes”) and the Gottlieb Daimlerand Karl Benz-Foundation is gratefully acknowledged. van Schewick – Towards an Economic Framework for Network Neutrality Regulation
Publication Year: 2007
Publication Date: 2007-01-01
Language: en
Type: article
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Cited By Count: 139
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