46 Pages Posted: 11 May 2011
Date Written: May 10, 2011
Many Internet-access providers simultaneously offer Internet access and other services, such as traditional video channels, video on demand, voice calling, and other emerging services, through a single, converged platform. These other services - which can be called "managed services" because the carrier offers them only to its subscribers in a manner designed to ensure some quality of service - in many circumstances will compete with services that are offered by unaffiliated parties as applications or services on the Internet. This situation creates an important interaction effect between the domains of Internet access and managed services, an effect that has largely been missing from the decade-long debate over network neutrality rules for Internet service. This Article examines this interaction effect, focusing on the context of online video services and on the recent NBC-Comcast transaction that finally highlighted these concerns. The Article contends that, when these interaction effects are understood, a nondiscrimination rule applied only to a converged carrier’s Internet service can be rendered ineffective by the carrier’s move to managed services offerings. As a result, a nondiscrimination rule, if it is to be effective, would need to be supplemented by specific behavioral or structural rules that both require the carrier to maintain its Internet service and limit the carrier’s freedom of action in the managed services domain. This reveals the difficulty of drafting effective nondiscrimination rules. It also reveals that non-economic justifications for nondiscrimination rules cannot stand alone; they must be supplemented by the economic-reasoning tools common to antitrust argument, in order to identify and determine the ultimate effects of the rules.
Keywords: Network Neutrality, Net Neutrality, Telecommunications Regulation, Video over the Top, Internet Video, Managed Internet Services
JEL Classification: K23, L96
Suggested Citation: Suggested Citation
Speta, James B., Supervising Managed Services (May 10, 2011). Duke Law Journal, Vol. 60, 2011; Northwestern Law & Econ Research Paper No. 11-15. Available at SSRN: https://ssrn.com/abstract=1837669