Network neutrality and the efficiency of internet application service providers: A meta-frontier analysis

As applications require a wider and more stable bandwidth, Internet serviceproviders (ISPs) try to control application services, and it has caused the networkneutrality debate. This paper categorizes application services into four groups accordingto the attributes of bandwidth-usage and latency-sensitivity. By estimating the efficiencyof four groups, whether there is difference in efficiency among those four groups is testedso as to see the discrimination of ISP under the circumstance in which network neutralityis not kept. Efficiency which is comparable among companies with different productionfunctions can be calculated using a meta-frontier production function. Based on theestimated result, when the degree of freedom changes under network neutralityregulations, we forecast the effect of the development of the application service area andevaluate the network neutrality regulation.