WASHINGTON, May 9 /PRNewswire/ -- Proposed Internet regulations would deprive consumers of $69 billion in potential benefits over the next 10 years by barring voluntary commercial agreements necessary to bring some new applications and services to the Internet, the American Consumer Institute estimates in a new study released today. The study also says net neutrality regulations would likely raise the cost of Internet connections for consumers and force millions of Americans to drop their broadband subscriptions, particularly lower income consumers.
"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.
About The American Consumer Institute
The Institute is an independent consumer organization committed to providing information, analysis, and policy research to the public for the betterment of American consumers. The Institute is primarily comprised of volunteer public policy experts covering a wide range of issues. http://www.theamericanconsumer.org/. The full study, "Net Neutrality and the Effects on Consumers," is available at http://www.theamericanconsumer.org/research.htm.
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