Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

A Member of the Law Professor Blogs Network

Monday, November 26, 2012

Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK

Posted by D. Daniel Sokol

Laura Nurski (Center for Economic Studies, Faculty of Business and Economics, KU Leuven) explores Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK.

ABSTRACT: Consumers buy internet access from Internet Service Providers (ISPs) to reach online content providers. Under net neutrality, an ISP is not allowed to discriminate between content providers, even though it might have an incentive to do so. An ISP might want to sell a “fast lane” to content providers or use quality degradation to foreclose content providers that compete with the ISP's own content. Discarding net neutrality will have two effects on consumers: (i) consumers will reoptimize their choice of online content, at constant ISP choices; and (ii) consumers will reoptimize their choice of ISP. I empirically investigate whether an ISP has an incentive to break net neutrality, taking into account both channels of consumer response. I combine a novel data set on UK household content and ISP choices with data on ISP presence in local markets, as well as speeds and prices. Preliminary results indicate that a fast lane! increases consumers' surplus, industry revenues and advertising revenues. In contrast, foreclosure seems an unlikely scenario since it reduces the foreclosing ISP's revenues from selling broadband by more than it can recuperate through advertising on online content.

http://lawprofessors.typepad.com/antitrustprof_blog/2012/11/net-neutrality-foreclosure-and-the-fast-lane-an-empirical-study-of-the-uk-.html

| Permalink

TrackBack URL for this entry:

http://www.typepad.com/services/trackback/6a00d8341bfae553ef017d3cdbb128970c

Listed below are links to weblogs that reference Net Neutrality, Foreclosure and the Fast Lane: An empirical study of the UK :

Comments

Post a comment