Platforms and Policy in the Telecommunications and High-Technology Industry

In two-sided markets, platforms connect and facilitate transactions between separate groups of agents that value each other’s presence. Platforms are common in the telecommunications and high-technology sectors. For example, in telecommunications, Internet service providers connect consumers and companies providing services over the internet. In the high-tech sector, software and hardware companies connect consumers and companies developing applications for the platform. Platforms in these markets must serve both groups of customers and design pricing and business strategies so as to get both sides on board.

Project manager

Joacim Tåg

+46 (0)730337977
joacim.tag@ifn.se

This research project aims to develop the theory of two-sided markets and use this theory to provide guidance for regulation and policy in the telecommunications and high-technology industry. The focus is two-fold.

To evaluate Net neutrality regulation on the Internet. An important feature of the Internet is that it can be characterized as a two-sided market. Since the inception of the Internet, information packets are transported on the Internet under “net neutrality,” a regime that does not distinguish in terms of price between bits or packets depending on the services that these bits and packets are used for. But recently, Internet broadband access providers in the United States have demanded rights to additional compensation for carrying valuable digital services. Granting them this would be a sharp departure from the net neutrality regime and has started an intensive debate about the underlying structure of the Internet and how communications companies operating the network should be regulated.
To develop theory and to evaluate policy relating to open and closed platforms. It is important to recognize that many software and hardware platforms in two-sided markets have a choice. They could allow external companies to interface with their product (and provide open platforms), or they could choose to close the interface (and provide closed platforms).

The project was part of a doctoral thesis at the Swedish School of Economics and Business Administration in Helsinki and was financed by the Ministry of Education in Finland and the Academy of Finland.