Regulation and the Performance of Communication and Information Networks

Regulation and the Performance of Communication and Information Networks

Edited by Gerald R. Faulhaber, Gary Madden and Jeffrey Petchey

Digital markets worldwide are in rapid flux. The Internet and World Wide Web have traditionally evolved in a largely deregulated environment, but recently governments have shown great interest in this rapidly developing sector and are imposing regulations for a variety of reasons that are changing the shape of these industries. This book explores why the industrial organization of broadband ISPs, Internet backbone providers and content/application providers are in such turmoil.

Chapter 9: Network Neutrality and Sector Performance: Exploring Policy Options with Simulation Methods

Kurt DeMaagd and Johannes M. Bauer

Subjects: innovation and technology, technology and ict


Kurt DeMaagd and Johannes M. Bauer INTRODUCTION The main concern of the network neutrality debate is a clarification of the principles that ought to govern the relations between network operators and providers of applications and content. In this discussion, a broad range of economic and non-economic goals is advanced by stakeholders. Important economic concerns are the efficient use of network capacity and the creation of incentives that support investment and innovation in network infrastructure and advanced communication services. Whether, and which types of, legal and regulatory intervention can enhance sector performance is subject to considerable controversy. Vertical relations between network operators and content providers can be structured differently. Conceivable arrangements span a spectrum from reliance on ex-post antitrust to ex-ante rules and detailed regulation. Bringing clarity to this important policy discourse is complicated by the complexity of the issues, which are difficult to model analytically. Because the institutional design problem is relatively new, historical evidence that could be used to test alternative theories, or that could serve as a precedent to assess specific courses of actions, is fairly limited. Focusing on economic issues, this chapter explores the contribution of computational methods to develop a richer understanding of the potential effects of alternative approaches. The network neutrality debate is part of a broader overhaul of the legal and regulatory rules governing the information and communication industries. An increasing number of countries are revisiting the prevailing frameworks, which had been put into effect since the 1980s to facilitate the liberalisation 209 210...

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