Columbia Circuit vacated the anti-blocking and anti-discrimination aspects of the Open
Internet Order. Netflix saw its share price drop by 5% on the morning of the news and by
13% from its pre-Christmas peak as analysts envisioned “hundreds of millions of dollars in
data subsidies” (
SNL Kagan, 2014b). This followed an early January announcement by
AT&T allowing content providers the ability to pay for customers’ data use, a clear exam-
ple of behavior such regulations were trying to prevent. Zero-pricing was clearly under
threat.
In March 2015, the FCC responded to the courts by setting strong rules in favor of net
neutrality (
FCC, 2015). These included regulating broadband Internet access providers
under Title II of the Communications Act, giving them much broader regulatory pow-
ers, and explicitly prohibiting three practices that embody a non-neutral Internet: block-
ing, throttling, and paid prioritization. It applied the rules equally to both fixed and
mobile Internet providers.
101
In the EU, by contrast, there are no clear pan-national
rules. As part of the “Digital Agenda for Europe,” the European Commission in
September 2013 proposed measures that include a guarantee of net neutrality, and in
April 2014, the European Parliament strengthened these proposals. The 28 member states
need to next agree to the rules within the Parliament. At the time of this writing, this
process is very much in doubt (
Robinson, 2014).
The tradeoffs embodied in arguments over net neutrality are particularly salient for
online video given its dominance of broadband traffic. Proponents of net neutrality argue
it is needed to foster innovation and prevent the foreclosure of online video entrants.
Opponents argue discrimination allows for more efficient network management and
would enhance investments by both content providers and distributors, increasing con-
sumer welfare. While the academic literature is replete with theoretical models incorpo-
rating such tradeoffs, empirical evidence of these effects are scarce. The only paper I know
that addresses the issue with observational data is
Nurski (2014), who explores the issue in
using detailed UK data. She estimates demand for broadband video access and online
video consumption, finding that both are sensitive to connection speeds.
102
She then
simulates the effect of the entry of online video content in a world with net neutrality
and another with discrimination, finding discrimination only increases entry for content
providers with high fixed costs of production. Much more work is needed in this area.
7.6.2.2 Foreclosure in Online Video Markets
The non-discrimination terms vacated by the US Appeals Court also raise the possibility
that issues similar to those discussed in
Section 7.5.2 regarding the incentives an
101
The Order did not, however, apply these rules to connections between content and broadband providers
that were the focus of Netflix’s agreements with Comcast and Verizon, instead choosing to review these
on a case-by-case basis.
102
Lee and Kim (2014) also look at the issue by surveying roughly 500 Internet users.
332
Handbook of Media Economics
..................Content has been hidden....................
You can't read the all page of ebook, please click here login for view all page.