Post by Sapphire Capital on Jul 11, 2008 6:40:21 GMT 4
Network Neutrality and the False Promise of Zero-Price Regulation
C. SCOTT HEMPHILL
Columbia University - Columbia Law School
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Columbia Law and Economics Working Paper No. 331
Abstract:
This Article examines zero-price regulation, the major distinguishing feature of many modern network neutrality proposals. A zero-price rule prohibits a broadband Internet access provider from charging an application or content provider (collectively, content provider) to send information to consumers. The Article differentiates two access provider strategies thought to justify a zero-price rule. Exclusion is anticompetitive behavior that harms a content provider to favor its rival. Extraction is a toll imposed upon content providers to raise revenue. Neither strategy raises policy concerns that justify implementation of a broad zero-price rule. First, there is no economic exclusion argument that justifies the zero-price rule as a general matter, given existing legal protections against exclusion. A stronger but narrow argument for regulation exists in certain cases in which the output of social producers, such as Wikipedia, competes with ordinary market-produced content. Second, prohibiting direct extraction is undesirable and counterproductive, in part because it induces costly and unregulated indirect extraction. I conclude, therefore, that recent calls for broad-based zero-price regulation are mistaken.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1135828_code590399.pdf?abstractid=1119982&mirid=3
C. SCOTT HEMPHILL
Columbia University - Columbia Law School
--------------------------------------------------------------------------------
Columbia Law and Economics Working Paper No. 331
Abstract:
This Article examines zero-price regulation, the major distinguishing feature of many modern network neutrality proposals. A zero-price rule prohibits a broadband Internet access provider from charging an application or content provider (collectively, content provider) to send information to consumers. The Article differentiates two access provider strategies thought to justify a zero-price rule. Exclusion is anticompetitive behavior that harms a content provider to favor its rival. Extraction is a toll imposed upon content providers to raise revenue. Neither strategy raises policy concerns that justify implementation of a broad zero-price rule. First, there is no economic exclusion argument that justifies the zero-price rule as a general matter, given existing legal protections against exclusion. A stronger but narrow argument for regulation exists in certain cases in which the output of social producers, such as Wikipedia, competes with ordinary market-produced content. Second, prohibiting direct extraction is undesirable and counterproductive, in part because it induces costly and unregulated indirect extraction. I conclude, therefore, that recent calls for broad-based zero-price regulation are mistaken.
papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID1135828_code590399.pdf?abstractid=1119982&mirid=3