Information Technology Reference
In-Depth Information
willing to pay a premium to access the reserved
portion. Economically, offering a menu of ser-
vices at different prices is often good for both the
producer and the consumer (as seen in industries
as diverse as automobiles and financial services).
Ironically, numerous Internet companies pro-
vide thriving examples of such a system. Many
content providers offer free (advertising-driven)
access (to news, games and entertainment), while
withholding the better-quality content for paying
members. Amazon “discriminates” by offering
faster shipping speeds to those willing to pay
for it on a one-time basis or through its Amazon
Prime membership.
Neutrality advocates fear that the once provid-
ers are able to discriminate and charge a premium
for access to the private tier, the public tier will
be starved. Unless a constraint is in place, access
providers will only maintain the public Internet
to the extent that is profitable. Providers may, in
fact, find it profitable to allow the public Internet
to become congested - all the better to migrate
users and content providers to the higher-priced
reserved Internet.
net neutrality. Stakeholders in this group, led by
Google and Free Press, would like to see for-
mal regulations that explicitly prohibit the ISPs
from discriminating against particular content
or applications through blocking or slowing its
delivery. On the other side are stakeholders, led
by telephone and cable Internet providers, that
see no need for this type of regulation and voice
concerns that such policies would stifle techno-
logical innovation and jeopardize investments in
the next generation of networks.
As discussed in this chapter, the economic
arguments largely hinge on the competitiveness
of the market, now and in the future. Competition
will discourage ISPs from blocking or slowing
particular content or applications (especially if the
ISPs are forced to be transparent regarding their
actions). Consumers will leave an ISP that makes
particular content and applications unavailable or
less functional. ISPs that operative in a competitive
market will be largely unable to apply economic
pressure to content and application providers. In
fact, it's completely feasible that the content and
application providers will be applying the pressure
to ISPs in much the same way that desirable cable
networks are able to charge cable and satellite
television service providers.
Regarding the current level of competition,
most ISPs in the US currently operate as duopo-
lists; in most markets a cable television provider
competes with an incumbent telephone service
provider. It's not clear whether the lack of complete
market power in such a market will act to discour-
age an ISP from discriminating against particular
content or applications in a way that is detrimental
to consumers. Traditional economic models are
not in agreement regarding the behavior of firms
in a duopoly market (Perloff, 2003).
While the future is always uncertain, tech-
nological innovations are likely to increase
consumers' choices regarding Internet access.
Improvements in wireless networks have already
increased the number of Americans accessing the
Internet through mobile phones and mobile cards
CONCLUSION
The profound changes in the technology, content
and applications now used by the US public have
challenged the FCC's ability to regulate Internet
service provision. In less than a decade the FCC
has re-visited the industry several times. The effort
to devise a National Broadband Policy has given
the FCC the opportunity to reconsider several
of the policies that it has established in recent
years. These include policies that deregulated
the facilities-based wireline broadband Internet
access market.
Among the controversies surrounding the
National Broadband Policy, many surround the
obligations of ISPs to be neutral in their provision
of Internet access for content and applications.
On one side are proponents of re-regulation and
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