Network Neutrality Regulation Research Articles

The Rise and Evolution of Clouds and Private Networks – Internet Interconnection, Ecosystem Fragmentation

The emergence and growth of a collection of large and global private networks operated by big tech companies like Google, Facebook, or Amazon have thoroughly disrupted the Internet ecosystem. Associated developments have shifted and blurred the lines between public and private networking and contributed to a seismic shift in the topology and industrial organization of the ecosystem. In this paper, we explore the growing complexity and evolution of the Internet ecosystem and analyze the causes, drivers, and implications of fractures and fragmentation in the ecosystem. We adopt a multidisciplinary perspective and synthesize our findings into a typology of different dimensions of fractures and fragmentations. Our findings provide empirically substantiated insights into the complex and evolving web of vertical and horizontal relationships such as collaborations or integration strategies, complementarities, and synergies, as well as altered ownership and governance structures and market positions. The insights gained provide evidence that informs policymaking in various current matters such as network neutrality regulation, data governance and sovereignty, and the regulation of big tech.

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.

Current Challenges in Network Neutrality Regulation:

Current Challenges in Network Neutrality Regulation:

The Peculiar Case of State Network Neutrality Regulation

In the wake of the FCC’s 2018 decision to rescind federal network neutrality rules, several states have implemented their own network neutrality regulations, some in the form of procurement conditions on state contracts and others affirmative mandates requiring broadband Internet service providers to observe neutrality in providing service. The federal government and industry trade associations have challenged the state network neutrality laws as both preempted and unconstitutional under the “dormant Commerce Clause” doctrine. This paper analyzes those state restrictions, as a matter of constitutional law. The Court has recently changed dormant Commerce Clause law, liberalizing those limits with regard to the Internet last year in South Dakota v. Wayfair and showing more deference to state regulation of the Internet. But state network neutrality rules present an altogether different problem than typically arises in dormant Commerce Clause cases, requiring a new approach. Much state network neutrality regulation (especially regulation of Internet traffic exchange) is problematic under traditional dormant Commerce Clause and due process analysis because it explicitly reaches outside of local states. But more fundamentally, the entire economic theory underlying network neutrality regulation makes network neutrality especially problematic under dormant Commerce Clause law. Although states are likely free to regulate many aspects of the Internet – especially after Wayfair – the peculiar nature of network neutrality regulation makes it singularly poorly suited for state regulation.

An analysis of network neutrality regulation with reference to price discrimination

Traditionally, the internet platform has always been viewed as a one-sided network, imposing neutral network pricing between the subscribers and the content providers. This paper aims at analysing a situation that deviates from net neutrality and thereby studying the competitive outcomes when price discrimination is followed. The characteristics of internet platform as a two-sided market are initially reviewed followed by the analysis of the existing pricing mechanism of the internet service providers. The analysis throws light on the benefits accrued by the stakeholders, namely internet service provider, application provider and subscriber. With this understanding of the internet platform, the current issues of regulating net neutrality and ways of introducing price discrimination are briefly discussed. Building on seminal literature works, the central tenet of the article focuses on introducing a price discriminatory mechanism in a duopoly market condition that increases the overall stakeholders' value.

An analysis of network neutrality regulation with reference to price discrimination

Traditionally, the internet platform has always been viewed as a one-sided network, imposing neutral network pricing between the subscribers and the content providers. This paper aims at analysing a situation that deviates from net neutrality and thereby studying the competitive outcomes when price discrimination is followed. The characteristics of internet platform as a two-sided market are initially reviewed followed by the analysis of the existing pricing mechanism of the internet service providers. The analysis throws light on the benefits accrued by the stakeholders, namely internet service provider, application provider and subscriber. With this understanding of the internet platform, the current issues of regulating net neutrality and ways of introducing price discrimination are briefly discussed. Building on seminal literature works, the central tenet of the article focuses on introducing a price discriminatory mechanism in a duopoly market condition that increases the overall stakeholders' value.

Network Neutrality Through the Lens of Network Economics

Abstract Network neutrality for the Internet has been a fiercely debated topic for more than 15 years. Arguably spurred by recent regulatory actions in the US and the tremendous ecosystem evolution as characterized by the emergence and growing importance of global cloud platforms as well as the Internet of Things, the debate has recently seen a resurgence. This paper describes the origins and development of the regulatory stance towards network neutrality in the US and the EU. Against the background of the diverse evolutionary forces that shape the ecosystem, we examine network neutrality regulation through the lens of network economics. In doing so, we describe a series of challenges and misconceptions associated with current regulations and expound the requirement for a market-driven understanding of network neutrality.

The debate on network neutrality regulation: A technological innovation perspective

The debate on network neutrality regulation: A technological innovation perspective

A Principled Approach To Network Neutrality

By Lucie C. Audibert and Andrew D. Murray. The issue of regulation for mandated network neutrality is currently live in both the United States and the European Union. Traditionally, the models applied have been of the command and control or market regulation variety. Both approaches have been extensively criticised and both have suffered setbacks in recent years. This paper suggests it is time to abandon our experiments with traditional business regulation models and move to a principled approach for network neutrality. This principled approach, based upon the rights to privacy, expression and freedom to carry on a business, identifies the Internet as a public good which requires to be protected from interference if we are to fully realise its democratic potential. The proposed principled, or rights-based, approach to net neutrality would see regulations for network neutrality based in principles of fundamental rights and not business or market regulation principles. We believe this would be a radical new model for network neutrality regulation.

Co-investment in ultra-fast broadband access networks: Is there a role for content providers?

In many countries, Next Generation Access networks (NGA) deployment and penetration rate proceed at a slower pace than expected. It is argued that an ex ante contractual arrangement among residential-access Internet Service Providers (ISPs) and Content Providers (CPs), which builds on the complementarity between infrastructure and content, can promote the roll out of NGA. Indeed, one such contract brings down the portion of the investment cost borne by the ISPs (for a given cost of investment), increases end users׳ demand for improved connectivity and internalizes investment externalities. It is studied how a departure from network neutrality (NN) regulation of the Internet, allowing the ISP to negotiate with the CP a fee for (priority) delivery of content, affects firms׳ investment incentives. Using a simple model, it is shown that the ISP may invest more with than without NN, since the CP may have high bargaining power ex post (after NGA investment is sunk). Instead, the CP may be more willing to co-invest when NN is abandoned, either to evade high ex post fees (if the investment cost is low), or to foster NGA deployment (if the investment cost is high and the ISP has low bargaining power ex post).

Innovational Complementarities and Network Neutrality

Innovational Complementarities and Network Neutrality

Network Neutrality Regulation: The Fallacies of Regulatory Market Splits

Network neutrality regulations for the Internet have been discussed for about a decade. In Europe recent efforts have produced a proposal by the European Commission that envisages the introduction of a two-tiered Internet traffic regulation based on a regulatory market split between the markets for “public” Internet traffic services and the markets for specialised services offering higher and ensured quality of data transmission. We argue that regulatory market splits are artificial and the proposed regulation of markets for Internet traffic services constitutes a regulatory fallacy.

Federal and State Authority for Network Neutrality and Broadband Regulation

Federal and State Authority for Network Neutrality and Broadband Regulation

The effects of network neutrality on the diffusion of new Internet application services

The debate over network neutrality started with the appearance of new Internet application services that are latency sensitive and the use of broad bandwidth. These services are still diffusing, and more applications that use broader bandwidth with greater latency sensitivity are expected to be developed. To estimate precisely the effect of network neutrality regulation, it is necessary to forecast the number of end-users that will adopt application services. However, previous studies are limited in that they assume that the potential market and the final number of adopters are constant at the current market penetration level. By computational experiments, this research estimates the effect of network neutrality regulation considering the diffusion process of application services such as IPTV and VoIP. Additionally, it deduces the relation between the effect of network neutrality regulation and the level of diffusion of new Internet application services.

Network Neutrality, Access to Content and Online Advertising

We investigate possible effects of network neutrality regulation on the distribution of content in the Internet. We model a two-sided market, where consumers and advertisers interact through Content Providers (CPs), and CPs and consumers through Internet Service Providers (ISPs). Multiple impressions of an ad on a consumer are partially wasteful. Thus, equilibrium ad rates decrease with the number of CPs consumers can browse. Under network neutrality, CPs can connect to any ISP for free, while in the unregulated regime they have to pay a (non-discriminatory) access fee set by the ISP.We show that universal distribution of content is always an equilibrium with net neutrality regulation. Instead, in the unregulated regime, ISPs can use access fees to rule out universal distribution when it is not profitable, i.e. when repeated impressions of an ad rapidly lose value and consumers care for content availability to a small extent. We also find that the unregulated regime is never superior to net neutrality from a welfare point of view. Consumer and advertiser surplus are weakly higher under net neutrality. ISPs are unambiguously better off in the unregulated regime, while CPs are unambiguously worse off.

Modelling the welfare effects of network neutrality regulation: A response to Caves’s comment

In this issue, Caves (2012) has provided a comment to our paper (Economides and Tag, 2012) attempting to take our monopoly model to data. Based on data on content providers’ and ISPs’ profits in an oligopolistic market in the US, Caves attempts to draw conclusions on whether the parameter ranges in our model identified as generating a total surplus enhancement from network neutrality are reasonable. While we believe that taking a theoretical model to data is generally a good idea if done right, we must urge caution in drawing policy conclusions based on this effort. Economides and Tag (2012) was developed to show as clearly as possible a mechanism through which network neutrality regulation could potentially be warranted based on cross-group externalities. Because of this, the model contains simplifications of reality, especially of demand and cost functions, so as to make it tractable and produce closed form results. It was not intended to be taken directly to the data. Specifically, we assumed very simple demand and cost structures that do not necessarily correspond to actual data. To convincingly go from theory to empirical work, one would need to specify a detailed and much more realistic structural model of the broadband and content markets in a specific region and then attempt to estimate the parameter values of that model (such as, for example, Crawford and Yurukoglu (2012) do for the US multichannel television market). In economic research, combining theoretical and empirical work is useful for increasing our understanding of the world. But different theoretical models serve different purposes, and it is important to be careful of which predictions to take away from the models. The value and purpose

Network neutrality on the Internet: A two-sided market analysis

We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to content and application providers on the Internet. When access is monopolized, cross-group externalities (network effects) can give a rationale for network neutrality regulation (requiring zero fees to content providers): there exist parameter ranges for which network neutrality regulation increases the total surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content providers. However, for other parameter values, network neutrality regulation can decrease total surplus. Extending the model to a duopoly of residential broadband ISPs, we again find parameter values such that network neutrality regulation increases total surplus suggesting that network neutrality regulation could be warranted even when some competition is present.

From Competition to Freedom of Expression: Introducing Art. 10 ECHR in the European Network Neutrality Debate

Network neutrality concerns a heated debate on the role of Internet Service Providers (ISPs) as a potential gate keeper for Internet access of end-users and online content providers. In line with standard practice in European telecommunications policy the European regulatory response to the issue of network neutrality has been framed mainly in economic terms. At the same time, European civil society organizations have interpreted network neutrality in terms of fundamental rights, particularly freedom of expression. Moreover, while the amended regulatory framework for telecommunications now includes explicit references to fundamental rights, it remains unclear if and how fundamental rights should be applied to network neutrality disputes. This article relates network neutrality to the rich body of Art. 10 ECHR case law, and asks to what extent this jurisprudence is of relevance to network neutrality discussions. The findings of this research reveal that the claim that network management by ISPs would violate end-users’ freedom of expression is less straightforward than often assumed. Moreover, the opposite case in which network neutrality regulation violates ISPs’ freedom of expression is less far-fetched than it may seem. These conclusions are meant to move the European discussion on network neutrality and fundamental rights beyond rhetoric, towards a more substantial and analytical approach.

Network Neutrality on the Internet: A Two-Sided Market Analysis

We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to content and application providers on the Internet. When access is monopolized, cross-group externalities (network effects) can give a rationale for network neutrality regulation (requiring zero fees to content providers): there exist parameter ranges for which network neutrality regulation increases the total surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content providers. However, for other parameter values, network neutrality regulation can decrease total surplus. Extending the model to a duopoly of residential broadband ISPs, we again find parameter values such that network neutrality regulation increases total surplus suggesting that network neutrality regulation could be warranted even when some competition is present.

Network neutrality and the evolution of the internet

In order to create incentives for internet traffic providers, not to discriminate with respect to certain applications on the basis of network capacity requirements, the concept of market driven network neutrality is introduced. Its basic characteristics are that all applications are bearing the opportunity costs of the required traffic capacities. An economic framework for market driven network neutrality in broadband internet is provided, consisting of congestion pricing and quality of service differentiation. However, network neutrality regulation with its reference point of the traditional TCP would result in regulatory micromanagement of traffic network management.