'Net Neutrality,' Non-Discrimination and Digital Distribution of Content Through the Internet

Abstract

The vast majority of U.S. residential consumers face a monopoly or duopoly in broadband Internet access. Until now, the Internet has been characterized by a regime of 'net neutrality,' which means there has been no discrimination between the price of transmitting packets based on the identity of either the transmitter or the identity of the receiver, based on the application, or the type of content the packet contains. Providers of DSL or cable modem Internet access in the United States are taking advantage of a recent regulatory change that effectively abolishes 'net neutrality' and nondiscrimination protections. Due to their market power, these service providers are considering a variety of discriminatory pricing schemes. This article discusses and evaluates the effect a number of these schemes would have on the prices and profitability of network access, as well as the effect on complementary application and content providers. This article also discusses an assortment of anti-competitive effects created by price discrimination and evaluates the possibility of 'net neutrality' being imposed by law.