The debate on network neutrality regulation: A technological innovation perspective

摘要

In the network neutrality debate, safeguarding innovations in the digital economy is an importantconcern. However, the impacts of network neutrality regulation on technological innovationin telecommunications have not been well understood, especially with mathematical model. Thisstudy first briefly discusses the significant role of technological innovation in telecommunications.Then, we adopt a stylized two-sided model (Internet broadband provider connect thetwo sides of Internet, content providers and end customers) and use two-stage game theory toexamine the decision-making of network operators and content providers in two alternative situations,respectively, that is, the neutral regime and non-neutral regime. By comparing players'decisions in the two regimes, the impacts of network neutrality regulation on innovations arerevealed. We find that non-neutral regime increases both network infrastructure investmentsand congestion-sensitive content innovations. In other words, network neutrality regulationinhibits telecommunications technological innovation and meanwhile hinders the emergence ofhigh-level content innovation.