Net Neutrality Regulation: The Economic Evidence

Abstract

In the authors' shared opinion, the economic evidence does not support the regulations proposed in the Commission's Notice of Proposed Rulemaking Regarding Preserving the Open Internet and Broadband Industry Practices (the "NPRM"). To the contrary, the economic evidence provides no support for the existence of market failure sufficient to warrant ex ante regulation of the type proposed by the Commission, and strongly suggests that the regulations, if adopted, would reduce consumer welfare in both the short and long run. To the extent the types of conduct addressed in the NPRM may, in isolated circumstances, have the potential to harm competition or consumers, the Commission and other regulatory bodies have the ability to deter or prohibit such conduct on a case-by-case basis, through the application of existing doctrines and procedures. Hence, the approach advocated in the NPRM is not necessary to achieve whatever economic benefits may be associated with prohibiting harmful discrimination on the Internet.

An Internet Cost Model, Assignment of Costs Based on Actual Network Use

“…It has been argued that according to the criteria to establish the regulation and the vigilance of the Internet in order to optimize the infrastructure neutrality, the consumer welfare could be harmed in the short and long terms (Brito, Cave, Crandall, Darby, & Ehrlich, 2010). It is also considered that national regulatory frameworks, thinking in the globalization of data processing based services, have to ensure certain equity between monopolies and foreign competitors (Cave & Corkery, 2009), and it is clear that the importance of the information processing will increase every environment of economic activity (Muntean, Tarnaveanu, & Paul, 2010).…”

Net Neutrality or Minimum Quality Standards: Network Effects vs. Market Power Justifications

“…Market competition could then weed out those broadband providers whose upstream pricing, discrimination, or quality of service impose costs on consumers that exceed the benefits in improved marketing and network management. Hahn andWallsten (2006) andBrito et. al.…”