Network Neutrality and the False Promise of Zero-Price Regulation
[DRAFT]
Abstract
This Article examines zero-price regulation, the major distinguishing feature of modern network neutrality proposals compared to traditional regulation of infrastructure industries. A zero-price rule prohibits a broadband Internet access provider from charging a 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 where socially produced content – content (such as Wikipedia) produced by collaboration without anticipation of financial reward – competes with ordinary market production. 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-based zero-price regulation are mistaken.