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Net neutrality regulation of the internet?

Author

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  • Ulrike Berger-Kögler
  • Jörn Kruse

Abstract

Strict net neutrality means that any data packet of any service should be treated strictly equal, independent of origin, destination and type of service, no matter what the economic value of congestion-free conveyance actually is. There is a broad consensus that any blocking or retardation of data packets for reasons of censorship or restraining substitutive services should be prohibited. The problem then focuses on dealing with temporary internet overload. It will be argued that the negative effect of congestion on quality varies strongly among services. If user flat rates and net neutrality come together, some quality-sensitive high value services might be crowded out by quality-insensitive low value services, which is inefficient. The optimal solution is the application of priority pricing, where higher prices are paid for higher priorities in case of overload. It will be concluded that the European approach, which relies on trusting in market forces combined with the soft regulation of adequate transparency rules and a sufficient degree of competition, will lead to an efficient outcome.

Suggested Citation

  • Ulrike Berger-Kögler & Jörn Kruse, 2011. "Net neutrality regulation of the internet?," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, vol. 2(1), pages 3-23.
    • Handle: RePEc:ids:ijmnec:v:2:y:2011:i:1:p:3-23
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    Citations

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    Cited by:

    1. Neute, Nadine & Budzinski, Oliver, 2016. "Ökonomische Anmerkungen zur aktuellen Netzneutralitätspolitik in den USA," Ilmenau Economics Discussion Papers 100, Ilmenau University of Technology, Institute of Economics.
    2. Stocker Volker & Knieps Guenter, 2018. "Network Neutrality Through the Lens of Network Economics," Review of Network Economics, De Gruyter, vol. 17(3), pages 115-150, September.
    3. Briglauer, Wolfgang & Stocker, Volker & Stockhammer, Paul, 2019. "Ist Netzneutralität tatsächlich gut? Eine Neubewertung vor dem Hintergrund der Regulierung in den USA und in der EU sowie aktueller Forschungsergebnisse," Policy Notes 38, EcoAustria – Institute for Economic Research.
    4. Stocker, Volker, 2013. "On the weal and woe of internet traffic management in Europe: A critical appraisal from a network economic perspective," 24th European Regional ITS Conference, Florence 2013 88542, International Telecommunications Society (ITS).

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