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Understand your Internet bill? Neither do the experts

December 04, 2013

Even the world’s most renowned economists don’t know what to make of your internet bill.

The University of Chicago’s Booth School of Business assembled an expert panel of distinguished economists from around the country – including Nobel Laureates and former members of the President’s Council of Economic Advisers – to examine public policy issues, including the implications of abandoning network neutrality.

Should internet service providers (ISPs) be allowed to charge content companies for access to ISP’s customers? Would that provide net benefits to consumers?

A whopping 58 percent of these award-winning economists participating in the poll were either uncertain or had no opinion. Of those votes, 29 percent felt the evidence to support a claim of net benefits was ambiguous, and another 29 percent felt unqualified to answer.

More panelists have previously responded with confidence to polls on more urgent topics –such as whether the US economy would take a serious hit as a result of a debt default due to either financial distress or political brinksmanship. Only six percent replied that they were uncertain about that risk – 75 percent agreed or strongly agreed, and only three percent had no opinion.

The issue of net neutrality, however, has many economists scratching their heads. The controversial and complex topic – whereby proponents say that ISPs and governments should treat all internet content equally – has become increasingly relevant since AT&T first proposed in 2005 that content providers could pay a fee to AT&T to deliver content to residential customers.

Net neutrality has vocal supporters in consumer groups, content giants, the Obama administration, and Apple co-founder Steve Wozniak, who in 2010 wrote an open letter in The Atlantic asking the FCC to keep the internet free.

On the opposite end of the spectrum, telecom and cable companies want to charge YouTube, Netflix, and other content companies for the so-called last-mile service of delivering the content that consumes so much of their network capacity at peak times.

Recently in Washington, D.C., net neutrality went on trial in the Circuit Court and the bargaining table in Congress. Verizon argued that the FCC had overstepped its bounds in regulating net neutrality, and House Republicans put it up against Obamacare as part of the debt ceiling negotiations.

Although more than half of economists punted on the poll, 20 percent did vote in disagreement with foregoing net neutrality. Berkeley’s Aaron Edlin, who specializes in antitrust economics and law, disagreed with a confidence of six on a 10 point scale, commenting that it “could easily lead to high transaction costs” and cause “confusion among consumers” about what they’re allowed to access.

Just nine percent agreed that allowing ISPs to charge content companies for access to consumers would provide net benefits to consumers (and 13 percent did not respond to the poll).