Abstract
We consider internet service providers’ incentives to zero-rate, i.e. to not count the usage of certain services towards data allowances, in the absence of payments from content providers. We show that zero-rating is adopted if and only if it strongly increases subscriptions. For this it is necessary that participation (as opposed to usage) network effects are strong enough and if zero-rating offers raise expectations about other subscribers’ usage. Zero-rating then also maximizes total welfare.
Original language | English |
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Article number | 108813 |
Journal | Economics Letters |
Volume | 186 |
DOIs | |
Publication status | Published - 1 Jan 2020 |
Keywords
- Net neutrality
- Network effects
- Zero-rating