100 likes | 104 Vues
Net Neutrality, Foreclosure and the Fast Lane An empirical study of the UK by Laura Nurski. Discussion: Glenn Woroch. Approach. Builds structural model of consumer demand for broadband internet access and content consumption
E N D
Net Neutrality, Foreclosure and the Fast LaneAn empirical study of the UKby Laura Nurski Discussion: Glenn Woroch
Approach • Builds structural model of consumer demand for broadband internet access and content consumption • Estimates using a cross section of UK nationwide consumer-level choice data • Simulates two threats to NN in video content • Finally, a reality check on all the NN modeling!
Consumer choice problem ISP selection No broadband ISP10 ISP1 ISPj . . . . . . … Pkg1,n1 Pkg11 Pkgj1 … Pkgj,nj Content selection . . . 19 Ki 1 0 (Ci1 , Ci2 , . . ., CiKi)
Choice model specification • ISP alternatives • Outside option is no internet + dialup internet • But also varies with cable/satellite TV subcription • No mobile broadband alternative • ISP-package-content combinations • Begs for nested logit • Would provide robustness test of IIA • Would identify differences in substitution across ISPs, packages, contents (e.g., BT vs. LLU vs. bitstream)
Model specification (cont’d) • Content combinations • Outside option? • Single speed coefficient for all video? • Gentzkow specification • Γkl > (<) 0 contents k and l are complements (substitutes) • Extends to more than two options? • Where are correlations of errors?
Model estimation • One-step estimation of two stage model • ISP subscription adjusts much slower than content choices • Should instrument for endogenous ISP prices
Counterfactual: YouTube fast lane • Simulation assumptions • YouTube’s speed on BT increases 8↑20 mbps • All other ISP-package pairs are unchanged • Won’t bitstream providers also be faster? • Consumers adjust both ISP and content combo’s • Holds chosen number of contents fixed? Net increase in YouTube ads, ISP revenues and consumer surplus
Counterfactual: YouTube fast lane • Alternative scenarios • Increase in cost to BT of YouTube’s fast lane • YouTube might strike deals with other ISPs • Other video CPs could strike similar deals with BT
Counterfactual: Catch-up TV slow lane • Simulation assumptions • Catch-up TV’s speed on BT falls 8↓2 mbps • Consumers substitute a bit of YouTube for much Catch-up TV Net reduction in consumer surplus • Alternative scenarios • Substitution to Live TV or movie downloads (e.g., Netflix subscriptions) • BT vertically integrated into favored content …
Another counterfactual • A slow lane for messaging • “IM, chat, voice calls” on BT slowed 8↓2 mbps • Substitution to BT fixed and mobile calling and texting, and away from Voip (e.g., Skype)