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“Net Neutrality,” Non-Discrimination and Digital Distribution of Content Through the Internet

Nicholas Economides ()

No 07-03, Working Papers from NET Institute

Abstract: The vast majority of US residential consumers face a monopoly or duopoly in broadband Internet access. Up to now, the Internet was characterized by a regime of “net neutrality” where there was no discrimination in the price of a transmitted information packet based on the identities of either the transmitter or the receiver or based on the application or type of content that it contained. The providers of DSL or cable modem access in the United States, taking advantage of a recent regulatory change that effectively abolished net neutrality and non-discrimination protections, and possessing significant market power, have recently discussed implementing a variety of discriminatory pricing schemes. This paper discusses and evaluates the implication of a number of these schemes on prices, profits of the network access providers and those of the complementary applications and content providers, as well as the impact on consumers. We also discuss an assortment of anti-competitive effects of such price discrimination, and evaluate the possibility of imposition of net neutrality by law.

Keywords: net neutrality; Internet; price discrimination; vertical restrictions; two-sided pricing; horizontal cooperation; raising rivals’ costs (search for similar items in EconPapers)
JEL-codes: C63 D4 D42 D43 L1 L12 L13 (search for similar items in EconPapers)
Pages: 23 pages
Date: 2007-03
New Economics Papers: this item is included in nep-com, nep-ict, nep-mic and nep-net
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