nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2007‒07‒13
two papers chosen by
Walter Frisch
University Vienna

  1. “Net Neutrality,” Non-Discrimination and Digital Distribution of Content Through the Internet By Nicholas Economides;
  2. Just Enough: Empowering Fixed-Line Telecommunications Consumers through a Quality of Service Information System By Patrick D. M. Barrow

  1. By: Nicholas Economides (Stern School of Business, New York University);
    Abstract: The vast majority of US residential consumers face a monopoly or duopoly in broadband Internet access. Up to now, the Internet was characterized by a regime of “net neutrality” where there was no discrimination in the price of a transmitted information packet based on the identities of either the transmitter or the receiver or based on the application or type of content that it contained. The providers of DSL or cable modem access in the United States, taking advantage of a recent regulatory change that effectively abolished net neutrality and non-discrimination protections, and possessing significant market power, have recently discussed implementing a variety of discriminatory pricing schemes. This paper discusses and evaluates the implication of a number of these schemes on prices, profits of the network access providers and those of the complementary applications and content providers, as well as the impact on consumers. We also discuss an assortment of anti-competitive effects of such price discrimination, and evaluate the possibility of imposition of net neutrality by law.
    Keywords: net neutrality, Internet, price discrimination, vertical restrictions, two-sided pricing, horizontal cooperation, raising rivals’ costs
    JEL: L1 D4 L12 L13 C63 D42 D43
    Date: 2007–03
  2. By: Patrick D. M. Barrow
    Abstract: Information, it is said, is power, and the proliferation of web-based information systems (IS) has made the potential for empowerment by information available to an increasingly large user population. The empowerment of consumers through quality of service information is a key component of modern UK economic and competition policy in order to both resolve certain information asymmetries between traders and consumers and facilitate switching, i.e. the ability of consumers to switch suppliers of goods and services. Using a case study approach, this paper concentrates not on the intricacies, physical design or specific information content of the IS itself but on the regulatory approach taken by the UK telecommunications regulator, Ofcom, to provide it. It considers how the mechanisms set up to provide and audit appropriate, comparable and reliable information actually favour the interests of the traders rather than the consumers. The result is that those people at whom such information is undoubtedly aimed (consumers) and who need it to make rational choices in the market are actually disempowered, particularly those vulnerable groups who may have special information requirements. It concludes that if consumers are to be properly empowered by information in such systems, the regulator must to more to better protect the consumer interest and provide them with information they actually need and not the information that the traders are willing to provide.
    Keywords: Telecommunications, quality of service, information systems
    Date: 2007–02

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