Recent Research: Network Neutrality

TILEC has published a report Network neutrality and the nature of competition between network operators written by Paul de Bijl and Viktória Kocsis on request of DGET of the Dutch Ministry of Economic Affairs. The paper deals with the problem that the neutral architecture of the Internet is being challenged by various parties, such as network operators providing the connections to end-users, who are strongly interested in gaining control of the information exchanged over the Internet. The paper analyses what are the effects on competition and welfare of such practices. Currently, there exists very little economic theory on network neutrality, and the paper provides a preliminary analysis of the type of economic modelling that can address network neutrality, as well as of the type of results that can be expected. In terms of policy recommendations, the paper suggests that laissez-faire might be risky because of the potential welfare loss of tactics that undermine network neutrality. To minimize the risk of regulatory failure, imposing minimal obligations on network operators, rather than imposing detailed regulations, may be a no-regret option for policy. The paper suggests that economists take a closer look at this type of option.