Network neutrality and congestion sensitive content providers: Implications for service innovation, broadband investment and regulation

Krämer, Jan and Wiewiorra, Lukas (2009): Network neutrality and congestion sensitive content providers: Implications for service innovation, broadband investment and regulation.

Abstract

We consider a two-sided market model with a monopolistic Internet Service Provider (ISP), network congestion sensitive content providers (CPs), and Internet customers in order to study the impact of Quality-of-Service (QoS) tiering on service innovation, broadband investments, and welfare in comparison to network neutrality. We find that QoS tiering is the more ecient regime in the short-run. However it does not promote entry by new, congestion sensitive CPs, because the ISP can expropriate much of the CPs' surplus. In the long-run, QoS tiering may lead to more or less broadband capacity and welfare, depending on the competition-elasticity of CPs' revenues.

• Item Type: MPRA Paper
• English Title: Network Neutrality and Congesition Sensitive Content Providers: Implications for Service Innovation, Broadband Investment and Regulation
• Language: English
• Keywords: Telecommunications, Internet, Net Neutrality, Network Congestion, Two-Sided Market, Quality of Service, Innovation, Investment, Regulation, Internet Freedom Preservation Act
• Subjects: L - Industrial Organization > L5 - Regulation and Industrial Policy; L - Industrial Organization > L9 - Industry Studies: Transportation and Utilities > L96 - Telecommunications; D - Microeconomics > D4 - Market Structure, Pricing, and Design

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