Information system in e commerce case study

Management Information Systems 15e KENNETH C. LAUDON AND JANE P. LAUDON CHAPTER 4 CASE 1 SUMMARY ETHICAL, SOCIAL, AND POLITICAL ISSUES IN E-COMMERCE What Net Neutrality Means for You Net neutrality refers to the pricing of Internet broadband service by the telephone and cable companies that provide the Internet backbone (Internet Service Providers or ISPs). Facing very large investment costs, ISPs would like to be able to charge more for heavy users of their networks—people, who, for instance, watch a large number of Netflix streaming movies each week. In some cases, ISPs have suggested they would like to eliminate or slow down certain traffic altogether, like BitTorrent music files, or Skype VOIP phone calls. The FCC and public policy advocates claim any discrimination against certain types of files, or charging more for heavy bandwidth use, is unfair, discriminatory, and will likely hurt innovation and the Internet. If Netflix and YouTube customers had to pay more for their videos, they might not watch so many. Systems (a) The FCC’s new net neutrality rules, explained in 172 seconds URL https://www.youtube.com/watch?v=sBKPacCuXsw; L=3:06 (b) CNET News—What the FCC Net neutrality rules will mean for Internet users URL CASE https://www.youtube.com/watch?v=84r3qd19tZU; L=1:37 Net neutrality is the idea that ISPs like Comcast, Time Warner, Verizon, and AT&T, must allow customers equal access to content and applications, regardless of the source or nature of the content. ISPs may not discriminate against any content, or types of files, by refusing to transmit these files, charging more for these files and content, or providing special high speed access for some users, like Netflix or Google. It also means that everyone will be continued Chapter 4, Case 1 What Net Neutrality Means for You 2 charged the same flat fee regardless of how much bandwidth they consume. This means that people who download very large video files pay no more for service than people who just send emails. The Internet currently fits this description, but service providers are increasingly interested in changing this fundamental principle to respond to recent trends in Internet usage. Currently, most Internet traffic is treated equally (or “neutrally”) by ISPs in the sense that someone who streams a Netflix movie each day to their computer pays no more for Internet service than someone who uses the Internet for email and Web surfing. This is not true for the cell-phone wireless system, where there are many different data plans, and the more bandwidth you use, the higher the charges. Net neutrality does not apply to wireless smartphone service. However, ISPs would like to be able to charge differentiated prices based on the amount of bandwidth consumed by content being delivered over the Internet, much like a utility company charges according to how much electricity consumers use. The carriers claim they need to introduce differential pricing in order to properly manage and finance their networks. Critics worry about ISP conflicts of interest: AT&T may want to prevent Skype traffic on its Internet connections in order to force customers to use the AT&T cell network. There are three basic ways to achieve a rationing of bandwidth using the pricing mechanism: cap plans (also known as “tiered plans”), usage metering, and “highway” or toll pricing. Each of these plans has historical precedents in highway, electrical, and telephone pricing. Cap pricing plans place a cap on usage, say 300 gigabytes a month in a basic plan, with more bandwidth available in 50 gigabyte chunks for, say, an additional $50 a month. The additional increments can also be formalized as tiers where users agree to purchase, say, 400 gigabytes each month as a Tier II plan. A variation on tier pricing is to offer speed tiers, charging more for higher speed Internet service. An alternative to cap plans are metered or usage-based billing charging on the basis of metered units of Internet service. One variation on metering is congestion pricing, charging more for peak hour Internet service congestion pricing, where, as with electric “demand pricing,” the price of bandwidth goes up at peak times, say, Saturday and Sunday evening from 6:00 P.M. to 12 midnight—just when everyone wants to watch a movie! Still a third pricing model is highway (toll) pricing where the firms that use high levels of bandwidth for their business pay a toll based on their usage of the Internet. Highway pricing is a common way for governments to charge trucking companies based on the weight of their vehicles to compensate for the damage that heavy vehicles inflict on roadways.