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Net neutrality and inflation of traffic
Peitz,M. Schütt,Florian
Peitz,M.
Schütt,Florian
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 the short-run effects of 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 allocation of traffic and traffic inflation. 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, the ISP implements the efficient allocation when allowed to introduce bandwidth tiering and charge for prioritized delivery.
Description
Date
2016-05
Journal Title
Journal ISSN
Volume Title
Publisher
Research Projects
Organizational Units
Journal Issue
Keywords
net neutrality, network congestion, telecommunications, quality of service, L12 - Monopoly ; Monopolization Strategies, L51 - Economics of Regulation, L86 - Information and Internet Services ; Computer Software, SDG 9 - Industry, Innovation, and Infrastructure
Citation
Peitz, M & Schütt, F 2016, 'Net neutrality and inflation of traffic', International Journal of Industrial Organization, vol. 46, pp. 16-62. https://doi.org/10.1016/j.ijindorg.2016.03.003
License
info:eu-repo/semantics/openAccess