Complementary Innovation and Network Neutrality

Telecommunications Policy, available online 6 December 2017

36 Pages Posted: 12 Dec 2017

See all articles by Johannes M. Bauer

Johannes M. Bauer

Michigan State University-Department of Media and Information

Guenter Knieps

University of Freiburg

Date Written: December 8, 2017

Abstract

One of the central goals of network neutrality policies is to safeguard Internet-based innovation. Historically, entrepreneurial activities in applications and services were a main driver of innovation and stimulated complementary advances in networking. With the increasing heterogeneity of services, this virtuous cycle of complementary innovation is changing. Building on evolutionary theories of innovation and the notion of general-purpose technologies, we examine how these changes affect Internet-based innovation. In this framework, we analyze the effects of network neutrality policies on innovation dynamics. Our analysis reveals that network neutrality regulations as currently implemented may impede and delay innovation experiments that require a differentiated quality of service arrangements. To overcome such undesirable effects on innovation, we propose an approach that allows safeguarding important goals of network neutrality while permitting a differentiation of network services in support of next-generation innovation.

Keywords: Network neutrality, innovation, general-purpose technologies, end-to-end design, market-driven network neutrality

JEL Classification: L86, L88, L96, O38

Suggested Citation

Bauer, Johannes M. and Knieps, Guenter, Complementary Innovation and Network Neutrality (December 8, 2017). Telecommunications Policy, available online 6 December 2017. Available at SSRN: https://ssrn.com/abstract=3084830

Johannes M. Bauer (Contact Author)

Michigan State University-Department of Media and Information ( email )

409 Communication Arts Building
East Lansing, MI 48824-1212
United States
517-355-8372 (Phone)
517-355-1292 (Fax)

HOME PAGE: http://www.msu.edu/~bauerj

Guenter Knieps

University of Freiburg ( email )

Platz der Alten Synagoge
Freiburg, D-79085
Germany

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