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Net Neutrality and Universal Service Obligations

Author

Listed:
  • Axel Gautier

    (LCII - Liège Competition and Innovation Institute, HEC Liège)

  • Jean-Christophe Poudou

    (MRE - Montpellier Recherche en Economie - UM - Université de Montpellier)

  • Michel Roland

    (CREATE - ULaval - Université Laval [Québec], ULaval - Université Laval [Québec])

Abstract

This paper analyzes whether repealing net neutrality (NN) improves or decreases the capacity of a regulator to make internet service providers (ISPs) extend broadband coverage through universal service obligations (USOs). We model a two-sided market where a monopolistic ISP links content providers (CPs) to end users with a broadband network of a given bandwidth. A regulator determines whether to submit the ISP to NN or to allow it to supply paid priority (P) services to CPs. She can also impose a broadband USO to the ISP, i.e. she can mandate the broadband market coverage. We show that the greater is the network bandwidth, the more likely the repeal of net neutrality increases ISP profits and social welfare. Regulation can still be necessary, however, as there are bandwidth ranges for which the ISP would benefit from a repeal of NN while such a repeal is detrimental to society.

Suggested Citation

  • Axel Gautier & Jean-Christophe Poudou & Michel Roland, 2022. "Net Neutrality and Universal Service Obligations," Working Papers hal-03609917, HAL.
    • Handle: RePEc:hal:wpaper:hal-03609917
    Note: View the original document on HAL open archive server: https://hal.umontpellier.fr/hal-03609917v2
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    References listed on IDEAS

    as
    1. Poudou, Jean-Christophe & Roland, Michel, 2014. "Efficiency of uniform pricing in universal service obligations," International Journal of Industrial Organization, Elsevier, vol. 37(C), pages 141-152.
    2. Michael Grubb & Victor Tremblay, 2015. "Introduction: Behavioral Industrial Organization," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(3), pages 243-245, November.
    3. Valletti, Tommaso M & Hoernig, Steffen & Barros, Pedro P, 2002. "Universal Service and Entry: The Role of Uniform Pricing and Coverage Constraints," Journal of Regulatory Economics, Springer, vol. 21(2), pages 169-190, March.
    4. Anton, James J. & Vander Weide, James H. & Vettas, Nikolaos, 2002. "Entry auctions and strategic behavior under cross-market price constraints," International Journal of Industrial Organization, Elsevier, vol. 20(5), pages 611-629, May.
    5. Belleflamme,Paul & Peitz,Martin, 2015. "Industrial Organization," Cambridge Books, Cambridge University Press, number 9781107687899, January.
    6. Reggiani, Carlo & Valletti, Tommaso, 2016. "Net neutrality and innovation at the core and at the edge," International Journal of Industrial Organization, Elsevier, vol. 45(C), pages 16-27.
    7. Choi, Jay Pil & Jeon, Doh-Shin & Kim, Byung-Cheol, 2014. "Net neutrality, Network capacity and Innovation at the Edges," TSE Working Papers 14-521, Toulouse School of Economics (TSE), revised Jul 2017.
    8. Edmond Baranes, 2014. "The interplay between network investment and content quality: Implications to net neutrality on the Internet," Post-Print hal-01830012, HAL.
    9. Chone, Philippe & Flochel, Laurent & Perrot, Anne, 2002. "Allocating and funding universal service obligations in a competitive market," International Journal of Industrial Organization, Elsevier, vol. 20(9), pages 1247-1276, November.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Internet; Net Neutrality; Universal Service Obligations; Prioritization; Regulation JEL: D21; K23; L12; L51; L96;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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