Net neutrality, Network capacity and Innovation at the Edges

Résumé

We study how net neutrality regulations affect a high-bandwidth content provider (CP)'s investment incentives to enhance its quality of services (QoS) in content delivery to end users. We find that the effects crucially depend on whether the CP's entry decision is constrained by the Internet service provider (ISP)'s network capacity. If capacity is relatively large, prioritized services reduce the QoS investment as they become substitutes, but improve trafic management. With limited capacity, by contrast, prioritized delivery services are complementary to the CP's investments and can facilitate entry of congestionsensitive content; however, this creates more congestion for other existing content. Our analysis suggests that the optimal policy may call for potentially asymmetric regulations across mobile and fixed networks.

Mots-clés

Net neutrality; network capacity; entry; quality of services (QoS); externalities; investments;

Codes JEL

D4: Market Structure and Pricing
K2: Regulation and Business Law
L1: Market Structure, Firm Strategy, and Market Performance
L5: Regulation and Industrial Policy
O3: Technological Change • Research and Development • Intellectual Property Rights