Net Neutrality Regulation Research Articles

Fair share of network costs and regulatory myopia: learning from net neutrality mistakes

ABSTRACT To boost the roll-out of the next generation telecommunications infrastructure, EU policy makers have advanced a proposal mandating some large online platforms to compensate network operators with a usage fee. Framed as a matter of large market players paying their fair share of contribution to telecommunications networks, the proposal would represent another unnecessary and harmful regulatory intervention. Indeed, the paper aims to demonstrate that the fair share debate is the poison fruit of a previous intrusive government initiative, that is, the net neutrality regulation. Furthermore, like net neutrality anti-discrimination rules, a fair share Big Tech tax would be a solution that wouldn’t work for a problem that doesn’t exist. Instead of continuing to interfere in market dynamics and private negotiations without any solid evidence of market failures, the EU should learn from past mistakes and acknowledge the limited scope for regulation in these dynamic markets.

The UK's net neutrality regulation helps neither consumers nor innovators

The UK's net neutrality regulation helps neither consumers nor innovators

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.

By The People: How ‘clicktivism’ helped shape net neutrality in India

In March 2015, the Telecom Regulatory Authority of India (TRAI) released a consultation paper inviting responses and comments from the public to recommendations that private telecom operators be allowed to charge extra for third-party internet-based applications and services. This was in response to certain telecom companies deciding to charge internet-based voice calls at the rate of voice calls, paving the way for differentiating between kinds of content transferred via the internet using mobile phones. In response, an unprecedented online movement inundated the TRAI website, seeking to overturn the recommendations, and laying the groundwork for what has come to be seen as robust net neutrality laws. The movement was magnified online by a group of artists, journalists, technologists, lawyers, and policy experts who came together under the Save The Internet campaign and encouraged internet users in India to take part in the consultation process. TRAI received over a million responses. It was this public outcry that defeated some of the most powerful players in the digital realm – from telecom companies to Facebook, leading to the net neutrality laws that now exist in India. This paper will attempt to chart the evolution of net neutrality in India, focusing on how the net neutrality regulations came to be. In so doing, the paper hopes to understand how a leaderless citizen movement helped shape policy within a highly technical space, normally considered the domain of ‘experts.’ As more and more ‘users’ of the internet are transformed into ‘consumers’ of internet-related products, the lines demarcating ‘consumers,’ ‘citizens,’ ‘users,’ and ‘data subjects’ are becoming increasingly blurred. In moments such as the public debate on net neutrality, not only did the ‘citizen’ aspect of internet users come to the fore, it also allowed for the observation of participatory democracy in action.

Fleeting neutrality: The inadequacies of the ex-ante net neutrality regulations in India

The paper seeks to address the economic and fundamental inadequacies of ex-ante net neutrality regulations in India. The current net neutrality regulations consider the internet service provider (ISP) market in a two-sided spectrum of content and application providers (CAPs) and end-users. However, the rapidly growing internet space has undergone numerous developments in recent years, giving rise to complexities such as vertical partnerships between the ISPs, CAPs and OTT service providers, the use of content delivery networks (CDNs) for the last mile, deployment of 5G on mobile devices, etc. The main hypothesis is that the ex-ante net neutrality regulations lack the tools to combat modern problems with their antiquated approach and measures. Accordingly, to analyse this proposition, the paper considers the existent literature on the fundamental aspects of net neutrality norms, and juxtaposes the economic and empirical findings from a post‐net neutrality regulation stance. The findings reveal that net neutrality measures that prohibit paid-prioritisation and zero-rating services lead to economic inefficiencies. Further, the restrictive net neutrality measures hamper investment and innovation in the market and fall short in dealing with vertical integration and the use of CDNs. Hence, to promote competition and protect net neutrality, especially in the lower layers of the ISP market, the paper recommends measures such as digital dynamism and transparency rules and studies the role of ex-post competition regulations in aiding net neutrality.

The paradox of (Inter)net neutrality: An experiment on ex-ante antitrust regulation✰

Net neutrality has been the most relevant and heavily debated Internet regulation policy of the last decade. Net neutrality aims to prohibit discrimination between data packages in terms of content, origin, destination, or type of equipment used. However, the Big Tech companies, sheltered by the net neutrality policy, have flourished. They now have the power to exclude minor companies, and therefore their contents, from the Internet market in de facto defiance of the net neutrality principle. Academic results regarding this net neutrality paradox are still ambiguous. To represent the current Internet market distortions and analyze a potential tool to adjust and strengthen the net neutrality principle, an economic experiment based on an extended version of the dictator game was conducted. In particular, the effect of an ex-ante control and sanctioning mechanism on the collusive behavior of big companies was studied. The regulation mechanism proves effective, significatively reducing the abusive behavior of large Internet companies. This result contributes to the debate on net neutrality, reinforcing the idea that policymakers, given the current asymmetric Internet market structure, should revise and update net neutrality regulations.

Device neutrality: openness, non-discrimination and transparency on mobile devices for general internet access

wo decades after the net neutrality debated started, the internet ecosystem has evolved and additional gatekeepers have emerged. In order to access content from content and service providers (CSPs), consumers have to pass through a whole internet access value chain, comprised of broadband providers, device manufactures and online platforms. Today online platforms, such as search engines, online marketplaces and other online intermediation services also play an important role in the consumer’s discovery and choice of CSPs. Likewise, devices (such as smartphones and connected speakers) and the software (such as operating systems and apps) that runs (or does not run) on them can significantly impact the consumer’s access to and choice of online services. In this report, we discuss whether, ‘openness’, ‘non-discrimination’ and ‘transparency’, which are the key pillars of net neutrality regulation, should be regulatory principles that also apply at other layers of the internet access value chain and specifically to certain types of devices. Most of our recommendations are very much in line with a number of new provisions that were included in the proposed DMA, which was published by the European Commission after we had started this study. The relevant provisions are Articles 5b, 5c, 5f, 6b, 6c, 6d, 6e, 6f, 6k and 6h. Generally, we concur with all of these provisions, but make a number of suggestions on how these may be adapted or specified in the context of devices in order to avoid unintended consequences June 2021 | Device neutrality: openness, non-discrimination and transparency 8/65 and in light of our findings in this report. We also show that almost all of these provisions would need to be specified further, including some of the Article 5 provisions, although these are deemed to be self-executing by the Commission.

Administrative Law and the Federal Communications Commission

The decision of the Federal Communications Commission to repeal net neutrality regulations in 2018 was met with legal challenges arguing that the Commission did not have authority under administrative law to make such sweeping policy changes. In light of the net neutrality court battles, this historical analysis of FCC cases examines the way the Supreme Court of the United States has evaluated the FCC’s regulatory authority in cases that invoke economic considerations. The analysis indicates that the Court interprets both the Communications Act and Administrative Procedures Act as providing the FCC with considerable latitude to determine ways to regulate economic focused areas of communications, including the license application process, regulation of new technologies and challenges from citizens groups.

Offering zero-rated content in the shadow of net neutrality

In the recent Telenor case, the EU Court of Justice has for the first time interpreted the relationship between net neutrality regulation and zero-rating offers, considering the former incompatible with the offer of packages in which data traffic generated by certain applications does not count towards the consumption of the data volume purchased and whereby, once that data volume has been used up, end-users may continue to use those applications without restriction, while other applications are blocked or slowed. However, despite their incompatibility with the net neutrality principle of non-discrimination, zero-rating offers may provide benefits to consumers, fostering broadband consumption and promoting product differentiation without necessarily leading to the exclusion of content providers. Therefore, a revision of the net neutrality regulation is needed in order to assess this practice in accordance with an ex post case-by-case investigation

Casting a Wide Net: The Federal Communication Commission’s Preemption of State Broadband Internet Regulation

In 2018, the FCC abruptly reversed course in the federal scheme for regulating the Internet. With its “Restoring Internet Freedom Order,” the FCC re-reclassified broadband Internet as an “information service,” and thus found it has no statutory authority to impose the net neutrality rules promulgated an earlier FCC in 2016. Nonetheless, the agency included a provision preempting state net neutrality laws or regulation. But it did so relying only on broad grants of regulatory authority and congressional policy. And in judicial review of that Order, the D.C. Circuit vacated the preemption portion of the Order, upholding the remainder of the administrative action. I argue that the FCC’s Order is a timely example of a modern administrative agency relying on expansive and broad statutory authority to preempt state law and getting it wrong. Doing so threatens to destabilize the already delicate balance of federalism implicated when the federal government implements its constitutional authority to preempt state law. Not only did the agency preempt state law after finding no statutory authority to impose the very laws it was preempting but arguably it relied on a broad reading of its delegated authority to do so. When exercising the power of preemption, special care is required for agencies no less Congress. This order simply does not pass muster. Ultimately, I argue the analysis the agency presented is informative as to the implications of the modern administrative state with federalism concerns.

Are There Universal Standards for Net Neutrality?

The regulation of the Internet in general, and network neutrality in particular, has become a priority for many governments around the globe. The United States is no exception. It enacted new rules protecting net neutrality in 2015 and then famously undid them in 2017. Other countries similarly struggle to regulate net neutrality effectively, including Brazil, India and those that comprise the European Union. Most national debates of net neutrality policy tend to be fractious affairs. There is deep disagreement surrounding the best way to approach the issue. In previous work, I have shown how the design and implementation of net neutrality norms by States can lead to more coherent, just, and sustainable policies when they are guided by universally-recognized human rights norms. This Article advances that thesis by identifying which human rights norms apply to net neutrality across the board and explaining how those norms fully address the most critical issues at the heart of net neutrality policy debates everywhere. These include: defining the content and scope of net neutrality; promoting Internet access to help close the digital divide; and regulating zero-rating, among others. To substantiate the novel claim that universal standards govern net neutrality, this Article engages in a comparative analysis of the major human rights legal frameworks erected by the United Nations, the Organization of American States (“OAS”), and Europe. It also surveys the practice of States that have adopted some form of net neutrality regulations to date. These comparative studies reveal a significant degree of normative convergence suggesting that standards have begun to crystallize, at least with respect to the basic definitional elements of net neutrality. The Article concludes by explaining why the existence of universal standards for net neutrality matters to and in the United States.

Offering Zero-rated Content in the Shadow of Net Neutrality

In the recent Telenor case, the EU Court of Justice has for the first time interpreted the relationship between net neutrality regulation and zero-rating offers, considering net neutrality regulation incompatible with the offer of packages in which data traffic generated by certain applications does not count towards the consumption of the data volume purchased and whereby, once that data volume has been used up, end-users may continue to use those applications without restriction, while other applications are blocked or slowed. However, despite their incompatibility with the net neutrality principle of non-discrimination, zero-rating offers may provide benefits to consumers, fostering broadband consumption and promoting product differentiation, without necessarily leading to the exclusion of content providers. Therefore, a revision of the net neutrality regulation is needed in order to assess this practice in accordance with an ex post case-by-case investigation.

Parliament Against Government and Industry: How Switzerland Decided to Implement Net Neutrality Against All Odds

This article investigates the net neutrality policy-making process in Switzerland in the past decade, from first attempts to regulate net neutrality to the implementation of regulation in 2019. Based on a qualitative content analysis, the study assesses the arguments employed by various policy-making actors to advocate or prevent particular governance solutions. Results of the empirical analysis show that early attempts to regulate net neutrality failed, but discussions about its handling were continued during the revision of the Telecommunications Act. Though the government was ultimately in favor of including only transparency requirements in law, parliament stood up to government and industry and proposed a net neutrality regulation that is inspired by EU legislation.

Net Neutrality Regulation in the EU: Competition and Beyond

Net Neutrality Regulation in the EU: Competition and Beyond

Net Neutrality and Its' Repeal: Small Firms' Shareholders Shrug While Large Firms' Shareholders Turn

The FCCs decision to repeal Net Neutrality governance of Internet traffic has not ended the debate over whether such protections are needed. This paper investigates the effects of changes in Net Neutrality regulation through an event study that unlike previous studies, employs as a baseline model, the Fama/French Three-Factor model to capture differences in rm size. The results are striking: for the most part, investors in both small and large firms are indifferent to changes in Net Neutrality rules. However, the selection of Chairman Pai is a signifi cant negative event for the group of largest rms. One explanation consistent with this finding is that the appointment of Pai gave a green light not only for Net Neutrality's repeal but also signalled that the FCC would take a favorable stance towards merger activity. Large firms in a given industry are more likely to operate as acquirers and therefore, more likely to realize losses in shareholder value.

Net Neutrality Regulation in South America: A progress review

Net Neutrality Regulation in South America: A progress review

Regulating Monopolistic ISPs Without Neutrality

Net neutrality has recently been heavily debated as a potential regulation of the Internet. This debate is centered around the argument whether the Internet Service Providers (ISPs) should be allowed to provide differentiated services over the Internet. Advocates of net neutrality have expressed concerns about the ISPs' pricing power, which might be used to discriminate Content Providers (CPs), and consequently destroy innovations at the edge of the Internet and hurt users' utilities. However, without service differentiation, ISPs do not have incentives to expand infrastructure capacities and provide quality of services, which will eventually impair the development of the future Internet. Although market competition among the ISPs would alleviate the problem and reduce the need for net neutrality regulations, the problem is more severe in monopolistic markets, e.g., rural access markets where natural monopolies exist due to high deployment costs and appropriate regulations are most in need. We study the service differentiation offered by a monopolistic ISP and find that the ISP's profit-optimal strategy makes a free ordinary service damaged good, which hurts the welfare of CPs and their users. Instead of imposing net neutrality regulations, we propose a more flexible and lenient policy framework that generalizes net neutrality regulations. We believe that by allowing ISPs to differentiate services under a well-designed policy constraint, the utility of the entire Internet ecosystem could be greatly improved.

Net neutrality regulation and the participatory condition

Net neutrality regulation and the participatory condition

The Internet Ecosystem and Net Neutrality Regulation: Taking it to the Edge

The FCCs decision to repeal Net Neutrality governance of Internet traffic has not ended the debate over whether such protections are needed. This paper investigates the effects of changes in Net Neutrality regulation through an event study that estimates the market model with event dummies. The results are striking: the biggest impact of Net Neutrality policy changes is on shareholders in the New Media grouping of firms, rather than the ISPs. Our policy conclusion is that the repeal of Net Neutrality regulation is not associated with changes in investor expectations that signal increases in total investment across the Internet ecosystem.

Net Neutrality Regulation: Much Ado about Nothing?

The economics literature on Net Neutrality (NN) has been largely critical of NN regulation on the basis of theoretical findings that NN violations can be both welfare improving and welfare deteriorating, depending on the circumstances of the case in question. Thus, an ex post competition policy approach would be preferable to a strict ex ante prohibition of NN violations. In contrast, the current paper argues that NN regulation is largely ineffective, in particular, when it comes to the prohibition of fast lanes and other quality of service (QoS) differentiations, and to a lesser extent, when it comes to the zero price rule. NN regulation is effective only in preventing the blocking of specific content and in preventing the favoring of ISP owned content and in preventing some price discriminations. These are also areas where NN regulations are more likely to be welfare-enhancing. Where they are ineffective, NN regulations are likely to create inefficiencies through the cost and allocative inefficiencies caused by NN bypass. The paper ends with a call for theoretical and empirical economic analyses of NN circumvention techniques.