Economics of Net Neutrality: A Review

Abstract

Network neutrality has been at the center of US telecommunications policy for several years, culminating in a recent FCC order imposing a limited form of net neutrality on US broadband Internet Service Providers (ISPs). The regulatory imposition of nondiscrimination and price regulation (the core of net neutrality) on ISPs has been hotly debated. In this paper, I review the recent economics literature on net neutrality. There is little evidence that violations of net neutrality have actually occurred, several papers suggest that there could be potential problems in the future. Most papers, however, suggest that prophylactic net neutrality regulation is unnecessary and may well be welfare-reducing. Most papers suggest that waiting for actual ex post evidence before regulatory interventions is the soundest policy.

Keywords: network neutrality, regulation, Internet, Internet Service Providers, broadband

JEL Classification: L51, L86, L96