Broadband Network Management and the Net Neutrality Debate

Production and Operations Management, Forthcoming

32 Pages Posted: 4 Oct 2009 Last revised: 21 Apr 2013

See all articles by Hong Guo

Hong Guo

University of Notre Dame

Hsing Kenneth Cheng

University of Florida - Warrington College of Business

Subhajyoti Bandyopadhyay

University of Florida - Warrington College of Business Administration

Date Written: October 29, 2012

Abstract

The debate of net neutrality and the potential regulation of net neutrality may fundamentally change the dynamics of data consumption and transmission through the internet. The existing literature on economics of net neutrality focuses only on the supply side of the market, i.e., a broadband service provider (BSP) may charge content providers for priority delivery of their content to consumers. In this paper, we explore a complete spectrum of broadband network management options based on both the supply and demand sides of the market. We find that although the BSP always prefers the non-neutral network management options, it does not always discriminate both sides of the market. From the social planner’s perspective, we find that some network management options maximize the social welfare under certain market conditions while other options reduce the social welfare. Using the terminology from a recent Federal Communications Commission report and order, we categorize the social welfare maximizing options as “reasonable network management” and the social welfare reducing options as “unreasonable discrimination”. We also identify conditions under which the BSP’s network management choices deviate from the social optimum. These conditions help establish the criteria under which the social planner might wish to regulate the BSP’s actions.

Keywords: Net neutrality, broadband network management, traffic prioritization, public policy

Suggested Citation

Guo, Hong and Cheng, Hsing Kenneth and Bandyopadhyay, Subhajyoti, Broadband Network Management and the Net Neutrality Debate (October 29, 2012). Production and Operations Management, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1480913 or http://dx.doi.org/10.2139/ssrn.1480913

Hong Guo (Contact Author)

University of Notre Dame ( email )

356 Mendoza College of Business
Notre Dame, IN 46556-5646
United States

HOME PAGE: http://www.nd.edu/~hguo

Hsing Kenneth Cheng

University of Florida - Warrington College of Business ( email )

P.O. Box 117169
Gainesville, FL 32611-7169
United States
352-392-7068 (Phone)
352-392-5438 (Fax)

Subhajyoti Bandyopadhyay

University of Florida - Warrington College of Business Administration ( email )

Gainesville, FL 32611
United States

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