The Repeal of Net Neutrality: Who Wins and Who Loses? An Event Study Analysis

Abstract

The internet is beginning to reshape our economy, but the extent and ways in which this is occurring is still largely not well understood. Recently, this topic emerged in the spotlight of economic debate and public discourse. On December 14th, 2017, the Federal Communications Commission met and voted to repeal the anti-discriminatory regulation for governing the internet known as net neutrality. A substantial amount of economic research has investigated the potential economic trade-offs that might arise from such a decision, but none of these hypotheses have been empirically supported. Through an event study analysis, this thesis seeks to provide the crucial empirical evidence support this research. Specifically, this thesis supports the hypothesis of Greenstein, Peitz, and Valletti (2016) that internet service providers will charge content providers for data access through a two-tiered pricing structure: charging a premium for a "priority lane" of data access over a "slow lane". In line with this hypothesis, this thesis finds that, as a result of the repeal of net neutrality, wealth will concentrate among the largest content providers at the expense of smaller firms and potentially even the end user. Furthermore, the results indicate that the repeal of net neutrality will not significantly impact the wealth of internet service providers, nor will it stifle the diversity of content.