"Despite proponents' best intentions, net neutrality proposals would be a twofold problem for consumers," study author Stephen Pociask said. "Innovations that require a guaranteed level of service won't come to market, and consumers would have to pay more for the services they receive."
Internet regulations would also prevent multi-sided pricing, where Internet content providers may voluntarily agree to pay a portion of network costs thereby reducing consumer prices. The study estimates that multi-sided pricing allows content providers to absorb a portion of network upgrade costs and would provide consumers $69 billion in benefits over the next 10 years. Such an arrangement also would benefit content providers and online advertisers by stimulating a 40 percent increase in broadband subscribers, which would increase advertising revenues by $6 billion per year.
Multi-sided pricing means that consumers only pay a portion of the cost of newspaper and magazine subscriptions, because advertisers typically pay a significant portion of the costs. Similarly, credit card companies often give consumers free credit cards, while merchants pay the credit card companies. However, net neutrality would prevent multi-sided pricing from reducing consumer broadband prices and force consumers to pay the full costs of network upgrades.
The study also finds that net neutrality restrictions would raise consumer prices and trigger a sharp dip in the number of Americans who subscribe to broadband services, particularly lower income consumers.
"Given the national commitment to universal broadband service, Internet regulations would drive millions of lower-income Americans offline, which is last thing we should do," Pociask said.
