Network Neutrality after Comcast: Toward a Case-by-Case Approach to Reasonable Network Management

Abstract:     
The Federal Communications Commission’s recent Comcast decision has rejected categorical, ex ante restrictions on Internet providers’ ability to manage their networks in favor of a more flexible approach that examines each dispute on a case-by-case basis, as I have long advocated. This book chapter, written for a conference held in February 2009, discusses the considerations that a case-by-case approach should take into account. First, allowing the network to evolve will promote innovation by allowing the emergence of applications that depend on a fundamentally different network architecture. Indeed, as the universe of Internet users and applications becomes more heterogeneous, it is only natural for the services that networks provide to diversify in response. Allowing prioritized services would also benefit consumers by allowing them to purchase only the level of service that they need. More diverse business relationships would also allow the network to reflect the insights of two-sided markets, which suggest that the money flowing through the network will often vary in magnitude and direction over time. Any mandated access regime would also confront substantial implementation difficulties and would raise the capital costs of deploying new network facilities. Lastly, a case-by-case approach to network neutrality would provide better ex ante guidance if it incorporated the jurisprudence developed by the Supreme Court applying the rule of reason under the antitrust laws.

Number of Pages in PDF File: 30

Keywords: Internet, standardization, interoperability, quality of service, tiered services, two-sided markets, investment incentives, rule of reason, prioritization, network diversity

JEL Classification: K23, L82, L86, L96, L98

Accepted Paper Series