Net Neutrality and Fairness: Why Consumers do not Appreciate Pay-For-Priority Internet Access
University of Passau
Karlsruhe Institute of Technology
September 10, 2013
Although Internet service providers (ISPs) are technically capable as well as legally allowed to offer customers differentiated pay-for-priority Internet access services, such user tiering is currently not offered by ISPs. We argue that ISPs are hesitant to tap the price discrimination potential of tiered Internet access services, because they fear that such differentiation would be considered unfair by customers. In a representative survey among German ISP customers we find that customers’ perceptions of fairness as well as the framing of the quality-of-service mechanism by which user tiering is provided are indeed decisive for their willingness-to-pay for tiered Internet access. Therefore, given our data, it is doubtful whether ISPs are able to profit from a departure of net neutrality in Internet access services, as user tiering will likely be perceived as unfair by many customers and will thus erode the willingness-to-pay for the non-prioritized best-effort class.
Number of Pages in PDF File: 34
Keywords: Net Neutrality, Quality of Service, Consumer Psychology, Fairness, Pricing, Regulation, Economics of IS
JEL Classification: L50, L96working papers series
Date posted: April 1, 2012 ; Last revised: September 10, 2013
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