Chapter 3 Answer guidance to end of chapter questions

1. At present, it is argued, the existence of market failures require government regulation to ensure net neutrality. Is this true? In particular is it true in the United States? And is it true in the United Kingdom?

To answer this question I would expect the student to discuss in order:

1. Students should define net neutrality. As defined by Berners-Lee it is “the principle that data packets on the internet should be moved impartially, without regard to content, destination or source”. They should note it does not mean charges cannot be levied for network use only that data packets should not be prioritised or hindered.
2. The net neutrality challenge. This is a problem where ISPs degrade or limit access to certain types of data or service either contractually or through network tools. Students should discuss the findings of Professor Wu in his paper Network Neutrality, Broadband Discrimination.
3. Are there market failures? Apparent failures in the United States as evidenced by the Comcast case. This may historically have been seen as a peculiarly North American problem as arguably in the EU/UK an effective market for internet access exists thanks to the European Regulatory Framework and the Communications Act 2003. Students may discuss Dougal Scott’s comments. However the 2012 study by the Body of European Regulators of European Communications and the 2011 OFCOM study Approach to Net Neutrality suggest there are market failures in Europe and the UK also.
4. Discuss what the FCC is doing to correct the market failures in the Unites States the 2010 Open Internet Report and Order. This must be set against the Comcast appeal, the decision in Cellco Partnership v FCC and the 2015 Open Internet Rules and Order (and USTA Challenge).
5. Discuss the current state of European/UK intervention in this area. In particular the open internet regulation, its reception and its 2018 repeal. 

2. Can it be said that there is, or should be, a fundamental right to a free and open Internet?

To answer this question I would expect the student to discuss in order:

1. The rights based approach has foundations in the paper “A Principled Approach to Network Neutrality” by Audibert and Murray.
2. The Audibert/Murray argument that ‘mandating network neutrality through regulation is crucial to the protection of fundamental human rights [as well as] to ensure fair competition and innovation’ should be identified an examined.
3. Audibert/Murray develop a number of arguments in support of this primary among this is that the internet now fulfils a vital democratic function. This should be examined.
4. Further the internet is an indispensable vector of participation in more routine, yet still crucial, activities. One need only to think of the amount of daily transactions and personal business or social activities we carry out through the internet. Almost all dealings with our banks, telephone companies, electricity and gas providers, gyms, universities, etc., are made online. Without an internet connection, we are automatically shut off from easy, streamlined access to these essential services. The centrality of the internet to our everyday lives suggest it is of fundamental importance.
5. The counter argument against this is mostly in the economics of net neutrality literature, which suggests the network should not be regulated – see Becker, Carlton, and Sider.

3. Does net neutrality necessarily entail a trade-off between competing values and interests?

To answer this question I would expect the student to discuss in order:

1. The debate between the free market economics argument as put forward by Becker, Carlton, and Sider, Hahn and Wallsten and Faulhaber and the need for market regulation as put forward by Ohlhausen, Berners-Lee, Wu and Lessig.
2. To discuss whether Net Neutrality is a right or whether it is a market intervention. Comparing some of the economic arguments with the rights arguments of Audibert/Murray and the need for market intervention as argued for by Wu.
3. This can be demonstrated through case studies of the Open Internet Order and its later challenge in the Comcast case and then withdrawal by the FCC. These US case studies may be compared to the EU approach to net neutrality.
4. A particular case study which suggests that some forms of Net Neutrality regulation may intervene in the market unnecessarily is around zero rating and a discussion of zero rating regulation (and in particular whether zero rating is harmful) is necessary.