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Zero rating and capacity investment
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Resumo(s)
This paper analysis zero-rating, a practice where Mobile Network Operators (MNOs) exclude
some traffic from being charged when consumers use mobile broadband data. Focusing
on the downstream effects and considering two competing firms, two contents and network effects
(externality) on one of the contents, it is shown that zero-rating can be used to increase,
and thereafter, extract more surplus from consumers, when network effects are strong enough.
Moreover, it is shown that the interaction between contents has an impact on investment decisions,
as substitutes contents lead to lower investment when the network effect increases while
complementary contents result in higher investment for stronger network effects. Finally, zerorating
can lead to higher network capacity than under joint billing, when investment costs are
high enough.
Descrição
Palavras-chave
Zero rating Capacity constraints Network effects