Balancing Openness and Prioritization in a Two-Tier Internet

The open internet is plagued by congestion that restricts the development of sophisticated internet-based services. Broadband and edge providers have proposed a two-tier internet with a fee-based fast lane that coexists with the open internet. This requires a restriction of internet openness, also known as network neutrality, in the fast-lane internet. Opponents of a two-tier internet believe it would hinder innovation and cause underinvestment in the open internet. The challenge is for policy to balance a fee-based fast lane with the viability of the open internet. We find that edge providers with greater bandwidth requirements per unit of output convert to the fast lane and that the fast lane can drive innovation from edge providers with high bandwidth requirements. The broadband provider chooses fixed fee pricing for the fast lane but has no incentive to increase internet capacity as long as the open internet is not monetized. With no investments in internet capacity, all edge providers of the open Internet and their end users are worse off with a two-tier internet. To maintain quality-of-service in the open internet and to increase social welfare, a two-tier internet has to be coupled with policy whereby a portion of broadband provider profit is invested in internet capacity.

• 저널Information Systems Research · 30(3) · 745–763
• 토픽ICT Impact and Policies · Media Technology
• DOI10.1287/isre.2018.0828
• 저자Barrie R. Nault, Steffen Zimmermann