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Net Neutrality and Online Innovation: An Empirical Study of the UK

Author

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  • Nurski Laura

    (PhD Fellow of the Research Foundation, University of Leuven, Flanders (FWO), Leuven, Belgium)

Abstract

How does a fast lane on the internet affect the entry of online content providers? To answer this question, I provide empirical evidence that connection speed greatly influences consumption of online video and that changes in speed therefore directly impact the entry of video content providers. I also present a framework to think about the incentives of broadband providers to offer a fast lane with access fees which has direct profits effects as well as indirect demand effects. Finally, by combining the empirical model with the theoretical framework in a counterfactual analysis, I show that a fast lane with access fees only increases entry for content providers with high fixed costs of content provision. Using a novel data set on household consumption of online content and broadband penetration in local markets to estimate a structural model of industry demand and supply, this paper is the first to provide empirical evidence on the industry-wide effects of breaking net neutrality.

Suggested Citation

  • Nurski Laura, 2022. "Net Neutrality and Online Innovation: An Empirical Study of the UK," Review of Network Economics, De Gruyter, vol. 21(4), pages 171-209, December.
    • Handle: RePEc:bpj:rneart:v:21:y:2022:i:4:p:171-209:n:3
    DOI: 10.1515/rne-2023-0063
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    More about this item

    Keywords

    net neutrality; innovation; internet;
    All these keywords.

    JEL classification:

    • L42 - Industrial Organization - - Antitrust Issues and Policies - - - Vertical Restraints; Resale Price Maintenance; Quantity Discounts
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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