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Net Neutrality is Imperfect and Should Remain So!

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  • Nicolas Curien

Abstract

Network neutrality is often mistakenly assimilated with the non-discrimination of Internet usage. Although this rough view is acceptable at first sight, as far as blocking of content or clearly anti-competitive discrimination are concerned, it becomes confusing at second sight, when the efficiency of traffic management, on the supply side, or the differentiation of consumers’ requests, on the demand side, are considered. A neutrality principle ignoring traffic efficiency and demand differentiation through enforcing a strict homogeneity in the treatment of data packets on the network would prove inappropriate as it would downgrade the quality of service while not meeting consumers’ needs.In order to clarify the on-going debates, an unambiguous and formal definition of the concept of neutrality is required. In this contribution, a tentative definition is proposed, based on the economic principle of efficiency. Perfect neutrality is first shown as being efficient, i.e. welfare maximizing, in an ideal context C*. Then, by definition, the efficient network design in some real context C distinct from C* is called C-imperfect neutrality. Depending on the specification of context C, neutrality may involve some form of efficient discrimination and becomes a flexible concept as it translates into different settings in various technological or political environments and as it may change overtime in a given environment.This approach of the most efficient imperfection provides an adequate framework to discuss the main net neutrality issues presently at stake in the North-American and European scenes. Among those, we shall emphasize traffic management, segmentation of demand, funding of the next generation access networks, interference of governmental policies with networks’ operations, regulation of neutrality.

Suggested Citation

  • Nicolas Curien, 2013. "Net Neutrality is Imperfect and Should Remain So!," EUI-RSCAS Working Papers 22, European University Institute (EUI), Robert Schuman Centre of Advanced Studies (RSCAS).
  • Handle: RePEc:erp:euirsc:p0337
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    References listed on IDEAS

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    1. Viktória Kocsis & Paul Bijl, 2007. "Network neutrality and the nature of competition between network operators," International Economics and Economic Policy, Springer, vol. 4(2), pages 159-184, August.
    2. Economides, Nicholas & Tåg, Joacim, 2012. "Network neutrality on the Internet: A two-sided market analysis," Information Economics and Policy, Elsevier, vol. 24(2), pages 91-104.
    3. Jean‐Charles Rochet & Jean Tirole, 2006. "Two‐sided markets: a progress report," RAND Journal of Economics, RAND Corporation, vol. 37(3), pages 645-667, September.
    4. Jean-Charles Rochet & Jean Tirole, 2014. "Platform Competition in Two-Sided Markets," CPI Journal, Competition Policy International, vol. 10.
    5. Christiaan Hogendorn, 2007. "Broadband Internet: net neutrality versus open access," International Economics and Economic Policy, Springer, vol. 4(2), pages 185-208, August.
    6. Robin S. Lee & Tim Wu, 2009. "Subsidizing Creativity through Network Design: Zero-Pricing and Net Neutrality," Journal of Economic Perspectives, American Economic Association, vol. 23(3), pages 61-76, Summer.
    7. repec:rje:randje:v:37:y:2006:3:p:645-667 is not listed on IDEAS
    8. Eric Brousseau & Meryem Marzouki & Cécile Méadel, 2012. "Governance, Regulation and Powers on the Internet," Post-Print hal-01492356, HAL.
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    Keywords

    regulation;

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