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Net Neutrality and Universal Service Obligations: It’s All About Bandwidth

Author

Listed:
  • Axel Gautier

    (University of Liege
    CESifo)

  • Jean-Christophe Poudou

    (University of Montpellier)

  • Michel Roland

    (Université Laval)

Abstract

This paper analyzes whether repealing net neutrality (NN) improves or decreases the capacity of a regulator to make internet service providers (ISPs) extend broadband coverage through universal service obligations (USOs). We model a two-sided market where a monopolistic ISP links content providers (CPs) to end users with a broadband network of a given bandwidth. A regulator determines whether to subject the ISP to NN or to allow it to supply paid priority (P) services to CPs. She can also impose a broadband USO to the ISP: She can mandate the broadband market coverage. We show that the greater is the network bandwidth, the more likely is the repeal of NN to increase ISP profits and social welfare. Regulation can still be necessary, however, as there are bandwidth ranges for which the ISP would benefit from a repeal of NN while such a repeal is detrimental to society.

Suggested Citation

  • Axel Gautier & Jean-Christophe Poudou & Michel Roland, 2024. "Net Neutrality and Universal Service Obligations: It’s All About Bandwidth," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 64(4), pages 581-614, June.
    • Handle: RePEc:kap:revind:v:64:y:2024:i:4:d:10.1007_s11151-024-09945-1
    DOI: 10.1007/s11151-024-09945-1
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    References listed on IDEAS

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    1. Axel Gautier & Xavier Wauthy, 2010. "Price competition under universal service obligations," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(3), pages 311-326, September.
    2. Poudou, Jean-Christophe & Roland, Michel, 2014. "Efficiency of uniform pricing in universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 141-152.
    3. Krämer, Jan & Wiewiorra, Lukas & Weinhardt, Christof, 2013. "Net neutrality: A progress report," Telecommunications Policy, Elsevier, vol. 37(9), pages 794-813.
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    More about this item

    Keywords

    Internet; Net neutrality; Universal service obligations; Prioritization; Regulation;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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