Net neutrality and inflation of traffic

Martin Peitz and Florian Schuett

No 15-05, Working Papers from University of Mannheim, Department of Economics

Abstract: Under strict net neutrality Internet service providers (ISPs) are required to carry data without any differentiation and at no cost to the content provider. We provide a simple framework with a monopoly ISP to evaluate different net neutrality rules. Content differs in its sensitivity to delay. Content providers can use congestion control techniques to reduce delay for their content, but do not take into account the effect of their decisions on the aggregate volume of traffic. As a result, strict net neutrality often leads to socially inefficient traffic in ation. We show that piece-meal departures from net neutrality, such as transmission fees or prioritization based on sensitivity to delay, do not necessarily improve efficiency. However, allowing the ISP to introduce bandwidth tiering and charge for prioritized delivery can implement the efficient allocation.

Keywords: Net neutrality; network congestion; telecommunications; quality of service (search for similar items in EconPapers)
JEL-codes: L12 L51 L86 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ict, nep-mfd, nep-net and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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https://madoc.bib.uni-mannheim.de/37535/1/Peitz_und_Schuett_15-05.pdf

Related works:
Journal Article: Net neutrality and inflation of traffic (2016)
Working Paper: Net neutrality and inflation of traffic (2016)
Working Paper: Net Neutrality and Inflation of Traffic (2015)
Working Paper: Net Neutrality and Inflation of Traffic (2015)
Working Paper: Net Neutrality and Inflation of Traffic (2015)
Working Paper: Net Neutrality and Inflation of Traffic (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:mnh:wpaper:37535

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