During the past decade, net neutrality has become a central issue in the debate over further development of the Internet. At a time when the United States has just adopted a landmark regulation on net neutrality and the European Union is in the final stages of defining its own position on net neutrality, this paper looks ahead and analyzes the implications of these decisions with a particular focus on their impact on Internet fragmentation.
What is at stake in the net neutrality debate? The policy choice boils down to two competing technical models with very different commercial opportunities: a non-discriminatory infrastructure with innovation occurring at the edges, and an evolution toward “smart” networks that are permitted to develop new business models on the physical infrastructure. US regulators have taken a clear position that would ban any form of discrimination in the infrastructure for solely commercial reasons. The future of net neutrality in the European Union is more uncertain. This paper identifies four possible areas for Internet fragmentation, if net neutrality rules in the United States and European Union significantly diverge: further divergence between the US and the EU regarding the competitiveness of their Internet industries; increase barriers of market entry for new innovative start-ups in the EU that seek to challenge Silicon Valley tech titans; divergence of customer experience of the Internet; and discriminatory interconnection practices could be used to undermine the global Internet marketplace of information and services.
