Network Neutrality and the False Promise of Zero-Price Regulation
NETWORK NEUTRALITY AND THE FALSE PROMISE OF ZERO-PRICE REGULATION C. Scott Hemphill t This Article examines zero-price regulation, the major distinguishing feature of many modern "network neutrality" proposals. A zero-price rule prohibits a broadbandInternet access providerfrom charging an application or content provider (collectively, "content provider") to send information to consumers. The Article differentiates two access provider strategies thought to justify a zero-price rule. Exclusion is anticompetitive behavior that harms a content provider to favor its rival. Extraction is a toll imposed upon content providers to raise revenue. Neither strategy raises policy concerns that justify implementation of a broad zero-price rule. First, there is no economic exclusion argument that justifies the zero-price rule as a general matter, given existing legal protections against exclusion. A stronger but narrow argument for regulation exists in certain cases in which the output of social producers, such as Wikipedia, competes with ordinary market-produced content. Second, prohibiting direct extraction is undesirable and counterproductive, in part because it induces costly and unregulated indirect extraction. I conclude, therefore, that recent calls for broad-basedzero-price regulation are mistaken. f Associate Professor and Milton Handler Fellow, Columbia Law School. Larry Darby, Brett Frischmann, Victor Goldberg, Harvey Goldschmid, Jeffrey Gordon, Robert Hahn, Michael Heller, Bert Huang, Kenneth Katkin, William Kovacic, Ilyana Kuziemko, Mark Lemley, Christopher Leslie, Lawrence Lessig, Lance Liebman, Edward Morrison, Richard Posner, Alex Raskolnikov, Robert Scott, Philip Weiser, Mark Wu, and Tim Wu, and participants in conferences at the University of Colorado (Boulder), the Max Planck Institute for Research on Collective Goods, and Michigan State University, provided helpful discussion and comments on previous drafts.
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