Intended and unintended effects of policy measures aimed at promoting net neutrality: an examination of the value chain for video distribution

Net neutrality has, for a number of years, been a topic of often heated discussion in the Internet and telecom community. Net neutrality, in essence, requires that Internet users have open access to content and applications on the Internet, and, vice versa, that providers of applications can reach their intended end users over the Internet. Video distribution clearly is an area where the Internet opens up opportunities for many new applications for consumers and businesses. At the same time, video distribution is also an area where new applications meet an existing ecosystem with existing business models. Our analysis shows that net neutrality interacts with video distribution at different points along the value chain. We therefore call for a value chain approach, as assets in each part in the chain can develop into a control point for the open access to content and applications. Moreover, a measure aimed at one part of the chain can have an effect in other parts as well. Policy measures that are in force now, or that are expected in 2012, focus at the public Internet lane part of the distribution chain and impose obligations on network providers, and Internet Service Providers (ISPs) in particular: transparency, no blocking/throttling, no ISP tariffing of Over the Top applications. Although each of these measures contribute to a certain extent to their intended effects, our analysis shows that they are likely to lead to more debates in other areas, as players try to compensate the loss of influence or revenue streams by rearranging the ways in which they exploit their assets. Incidents and debates have already occurred or can be expected in the areas of peering and interconnection, distribution of resources between public lane and managed lane and in particular the influencing of people’s navigation on the Internet through search, recommendations and app stores linked to devices.