This article asks if proposed “zero-price” net neutrality rules should be imposed on broadband carriers.
“Zero-price” rules, a type of net neutrality regulation, will not generally be necessary to protect broadband consumers and could hinder infrastructure growth. There might be a case for regulating large broadband consumers, such as Google.
- “Zero-Price” regulation, a proposal to foster network neutrality, would prevent access providers from charging content providers for sending information to consumers.
- There are two main methods, exclusion and extraction, employed by access providers that are thought to justify “zero-price” regulation. However, the author argues that neither of the methods raises enough concern to warrant the “zero-price” regulation that some commentators advocate for.
- Exclusion, where the access provider takes action that inhibits one application’s success in comparison to another, is one of the methods used that causes a call for “zero-price” regulation. However, these concerns are not valid, especially because antitrust law already protects many of the exclusion fears.
- Extraction, where the access provider uses the threat of exclusion against all applications to extract greater profits from them, is the other method that causes a call for “zero-price” regulation. It also fails as a valid cause for concern because extraction costs can be shifted to consumers and because Internet content is often created for non-financial reasons.
- Generally there is no justification for a “zero-price” regulation due to fears of exclusion or extraction; however, a stronger argument can be made for regulation when socially produced content, such as Wikipedia, is involved.
- Socially produced content, which is more efficient because of fewer transaction costs, is vulnerable when competing with market-produced content because it cannot afford access fees like market-produced content can. However, this is a narrow exception and only applicable to the limited amount of socially produced content that warrants protection.
- There is generally no economic justification for “Zero-Price” regulation, and attention ought to shift toward large content providers, such as Google, who may be more apt to exclude or extract due to bargaining power and position.