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94 Geo. L.J. 1847 (2005-2006)
Network Neutrality and the Economics of Congestion

handle is hein.journals/glj94 and id is 1859 raw text is: Network Neutrality and the Economics of Congestion CHRISTOPHER S. Yoo* ABSTRACT The Supreme Court's Brand X decision has reignited the debate over network neutrality, which would limit broadband networks' authority to impose restrictions on end users' ability to access content, run applications, and attach devices and to charge content and application providers higher prices for higher levels of quality of service. In this Article, Professor Christopher Yoo draws on the economics of congestion to propose a new analytical framework for assessing such restrictions. He concludes that when transaction costs render metering network-usage uneconomi- cal, imposing restrictions on bandwidth-intensive activities may well enhance eco- nomic welfare by preventing high-volume users from imposing uncompensated costs on low-volume users. Usage of bandwidth-intensive services can thus serve as a useful proxy for congestion externalities just as port usage served as a proxy for consumption of lighthouse services in Coase's classic critique of the economic parable of the lighthouse. In addition, content delivery networks and other commer- cial caching systems represent still another innovative way to manage the problems associated with congestion and latency that would be foreclosed by network neutral- ity. Furthermore, allowing network owners to differentiate their services can serve as a form of price discrimination that can mitigate the sources of market failure that require regulatory intervention in the first place. This framework suggests that broadband policy would be better served by embracing a network diversity principle that would eschew a one-size-fits-all approach and would allow network providers to experiment with different institutional forms until it can be shown that a particu- lar practice is harming competition. At most, concerns that telephone companies may prevent end users from using their digital subscriber line (DSL) connections to access Voice over Internet Protocol (VoIP) provide support for targeted regulatory intervention. They do not justify a blanket prohibition of end user restrictions that network neutrality proponents envision. TABLE OF CONTENTS INTRODUCTION .......................................... 1849 I. A BRIEF OVERVIEW OF THE DEBATE OVER NETWORK NEU R Y... 1855 II. SOURCES OF CONGESTION ON THE INTERNET. .................. 1860 * Visiting Professor of Law, University of Pennsylvania Law School; Professor of Law, Vanderbilt University. © 2006, Christopher S. Yoo. This Article benefited from workshops conducted at the 33rd Telecommunications Policy Research Conference; the Wharton Colloquium on Media and Communica- tions Law; the Entertainment, Media, and Cultural Policy Colloquium at the UCLA School of Law; and an ad hoc workshop at the University of Pennsylvania Law School, as well as from comments from Gerry Faulhaber, Bob Rasmussen, and Mike Vandenbergh. After the research underlying this Article was substantially complete, I was retained by the National Cable and Telecommunications Association (NCTA) to consult on matters related to issues discussed in this Article. The views expressed herein are my own and should not be attributed to NCTA. 1847

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