Network Neutrality and Congestion Sensitive Content Providers: Implications for Service Innovation, Broadband Investment and Regulation

Jan Kraemer () and Lukas Wiewiorra ()
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Lukas Wiewiorra: Karlsruhe Institute of Technology, Institute of Information Systems and Management

No 10-09, Working Papers from NET Institute

Abstract: We consider a two-sided market model with a monopolistic Internet Service Provider (ISP), network congestion sensitive content providers (CPs), and Internet customers in order to study the impact of Quality-of-Service (QoS) tiering on service innovation, broadband investments, and welfare in comparison to network neutrality. We find that QoS tiering is the more efficient regime in the short-run. However it does not promote entry by new, congestion sensitive CPs, because the ISP can expropriate much of the CPs' surplus. In the long-run, QoS tiering may lead to more or less broadband capacity and welfare, depending on the competition-elasticity of CPs' revenues.

Keywords: Telecommunications; Net Neutrality; Quality of Service; Innovation; Investment; Regulation (search for similar items in EconPapers)
JEL-codes: D42 L12 L43 L51 L52 L96 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2010-09, Revised 2010-09
New Economics Papers: this item is included in nep-com, nep-ict, nep-ino, nep-net and nep-reg
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:net:wpaper:1009

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