One argument against network neutrality—in favor of use(r)-specific discrimination by networks—is that neutrality is a misnomer, bias is inevitable, and we should not “artificially” bias the system against latency-sensitive applications like video-on-demand. Now I think this argument and its variants have significant holes. I discussed them elsewhere and have an article coming out soon with Barbara van Schewick that goes into plenty of detail debunking many of the economic arguments against network neutrality.
Still, I acknowledge that one cost of network neutrality regulation is the bias against latency-sensitive applications like video-on-demand. But is this such a serious cost? Won’t competing providers of “on-demand” services innovate, compete, and find a way to meet consumer demands even under a network neutrality regime? Haven’t they already? I can get plenty of video content “on-demand” through a variety of sources (iTunes and Netflix are two services I use that are sufficiently on-demand for my tastes, but then I am willing to wait a little bit while a video downloads from iTunes and even longer (a day) for a movie to arrive in the mail.) Tim Wu and I sat in his office the other day watching an episode of Lost he had downloaded from iTunes–the quality was fine and we didn’t have to wait that long for our demands to be met. iTunes was sufficiently on-demand. I suppose (some, many) people are willing to pay (much?) more for instant video gratification, but I am not so sure. So while a bias against latency-sensitive applications like video-on-demand might entail a cost, I am not sure whether the magnitude of that cost is as significant as opponents of network neutrality make it out to be; perhaps the issue is not really about the magnitude of the cost to society but rather concerns who gets the surplus generated by emergent on-demand services.
(Note: Along similar lines, we might consider the evolution of IP telephony over the past decade.)