We love the convenience of streaming, scrolling, and upgrading our devices — but at what environmental price? For Wilfried Sand-Zantman, Professor at ESSEC Business School, one of the internet’s most sacred rules may be steering us in the wrong direction. Net neutrality promises equal treatment for all, yet this very equality could be undermining sustainability. Here’s why it matters, and what we can do about it.

Related research: The environmental impact of Internet regulation, Jean-Christophe Poudou, Wilfried Sand-Zantman, Information Economics and Policy, Volume 65, December 2023, 101060, Elsevier. From an interview with Prof. Adrian Zicari, ESSEC Business School, Academic Director CoBS.

The Internet at any cost?

Prof. Adrian Zicari: The first thing that struck me when I read the paper is that net neutrality seems to be a sort of basic principle, a little like the Constitution, let’s say, and then you go on to assert that there is a trade-off with sustainability.

Prof. Wilfried Sand-Zantman: That’s true. So, net neutrality is something which is seen as a dogma, which is more or less discussed, for example, in the US, and it’s a kind of dogma based on the idea that content should be treated equally to prevent or to make sure that there is always freedom of speech and freedom of opinion. That means that in terms of content, nobody should be discriminated against.

However, it turns out that different means of conveying information on the internet have different environmental costs. And it’s here that the trade-off kicks in – because in a sense, from a constitutional point of view all content should be treated equally, but from an environmental point of view, all content or means of conveying the content do not have the same environmental cost. So, from an environmental economics and sustainability perspective, if we want to give the right incentive, we should also give bonuses or penalties, depending on the cost you inflict on others.

The notion of net neutrality suggests that everybody should pay the same cost. However, environmental economics would differ in standpoint – not everyone should pay the same cost because it depends on the cost you inflict on others. This creates a point of tension. And the idea for me is what I call the “missing price problem”.

From the point of view of an economist, I would naturally believe that price or some form of price can play a role in framing or changing behaviour. And if you want to take sustainability or environmental issues seriously, even though prices may have their own problems, because the ability to pay the price depends on who you are, price in general (considering subsidies, taxes), is part of the solution. So, this is a tension. Net neutrality means everyone should be treated equally, but we know from the economist Arthur Cecil Pigou that using price-based incentives is a necessary condition to achieve some goals.

Adrian: If I may go a step back, why does net neutrality end up impacting sustainability?

Wilfried: The impact happens via consumption. When we look at the growth of the use of the Internet and associated devices, we realise that the real major cost of the Internet is not so much its use, but the devices. This was my first discovery. However, the devices have only a use if there is enough capacity. As such, if you control the capacity, there is no need for changing devices all the time.

In this sense, everything is a bit linked. The question is, what can you control? And of course, in this research paper, we were focusing on the network. Even though the network per se does not constitute the major share of the cost, it’s a trigger for other things. If you have larger capacities and need bigger devices, and that entails changing devices and creating larger costs.

Adrian: It’s a never-ending circle.

Wilfried: Exactly. We’ll come back to that, but the point of tension that is net neutrality means that you need to have a sort of uniformity in the prices; whereas sustainability means that depending on the use, the costs are different, and so you need different prices. As I mentioned, this is the primary point of tension for me.

Internet Regulation: The paradox of trying to do good

Adrian: And then you explore several possibilities, you say, well, laissez-faire, or some kind of regulated prices…

Wilfried: Well, I don’t contend to be the Gabriel Zucman of the internet! It’s very hard to come up with precise results, but we try to see how for each type of different regulation shapes the incentive of different actors  So, with net neutrality, what we know is that no one will ever be incentivized to take care of the environment. We know that.  

Now, if we have the laissez-faire approach, which was advocated for by the network operators, then you will have different results. For example, there will be greater alignment between content providers and network operators. We know that content providers’ extra use of the network will have an impact on the internet service. And network operators, according to the laissez-faire approach, may want a part of the profit. On the other hand, if internet service providers do have a share of the profit, they may even pursue a policy of expanding the network even further.

This can raise concerns. When you try to understand congestion as a cost for the internet service provider, the perspective is so different for the content provider. For  content providers, they don’t really care about the cost of the network as a whole. They don’t have much incentive to play on that. So, service providers say “let’s give ourselves the tools, let’s have, for example, different prices for different types of content providers, and the one who requires more capacity will have to pay more.”

The problem is that when you take this type of approach there are two effects. As an analogy, it’s the same as when you open a road. When you open a road for a given traffic, you reduce congestion, which can be good. But you also create the incentive to drive more.

And so, the question is, to what extent may people want to drive more, and so to what extent will opening a new road have an impact on reducing congestion? Moreover, congestion also means creating a cost for environment. Because if you have congestions and you want to increase the capacity, then you need to have a new device. If you have a smarter way to adjust the current capacity, then you need a reasonable device.

Our research paper is a bit technical, but it all comes down to consumers. In a nutshell, you can have tools and you can have regulation which attempts to regulate companies. But, at the end of the day, if consumers always believe that consuming more and having newer things is better, it’s going to be very hard to solve our environmental problems.

Internet Regulation: The challenge of identifying user data and needs

Adrian: But isn’t this human nature?

Wilfried: Up to a point, yes. But the question is, what is the benefit of that for people? Taste, for example, doesn’t come from anywhere. If people are always used to always having more and they see that as having huge value for them – even if it’s marginal improvement – it’s going to be difficult to change things.

There is a current parallel with regulation over Shein and fast fashion, for example. We complain a lot about Shein, but we realise that Shein is super popular in France. It’s a societal problem. You can have regulation, and even intelligent regulation, and probably if the state was informed enough, a better kind of regulation would not be based on, let’s say, laissez-faire, but based on price regulation.

But first, you need to have the right information – for example, who is polluting at which level? And usually, this information is not very well known by the regulatory bodies. I myself have worked with some regulatory bodies and it’s very hard to get. Secondly, if there is pressure from consumers to consume always more, and if the marginal value of an additional consumption is always super high, then it’s going to be very, very, very difficult to maintain our carbon emissions.

The only way is if this extra usage is made to – and takes the place of – another usage. Suppose that you don’t need to use your car and use more internet – then there is a benefit. So, the question is, how do we create new tools? One answer is that we’ll have new tools using AI. But how do these new tools really complement, or substitute what existed before?

However, it could be a good complement with good value. For example, if you don’t need to use your car and you use the Internet to a greater extent, then you can have some of your meetings online – that’s a beneficial outcome. However, how would that work at the level of society? I’m afraid I don’t have a silver bullet to solve this!

Adrian: I see that your paper casts light on a problem that most of us were not aware of.

Wilfried: Indeed, I myself wasn’t aware of it before some people came to me and I tried to think about it. I was aware of the problem of neutrality, which for me was more or less the problem of how to share the value generated by internet between different stakeholders. But then going deeper into that, I realised that this whole construction also had a more global impact. And this global impact is growing as the use of internet grows too.

Some of this impact will be internalized by consumers through the prices. For example, we now talk a lot about change coming from AI, which is very costly in terms of energy. But because it’s very costly in terms of energy, this will be paid by the stakeholders. The consumer will have to pay – there will be a cost, and this cost will be internalized. But who’s going to pay for the extra environmental cost? The answer isn’t clear and that’s the reason why we come back to the missing price story.

We have to find the right price or the right way to make people pay the price – or even better, knowing that there is a price – so that they change their practices. This is really the idea of this research paper, because we know that some players can mitigate the environmental cost. But of course, if they don’t have any incentive to do so, they won’t do it. You have to say, okay, we know that if you are posting a video on YouTube, you can do it in many different ways, and you can use it in a more compressed or less compressed way, and the environmental cost will be very different.

So how can we give people the right incentive? The problem is complex, but if we don’t give any incentive to the people generating this content, it will not work. For me, it’s a first step. A necessary first step.

Net Neutrality: How to incentivize Internet providers and users to be responsible

Adrian: Can these incentives be set at the national level?

Wilfried: Yes, you can control it at the national level because you can control how much you put in the system and it’s something we can measure. You can say, for example, that if you are a heavy user, then there will be a price. Here too, an analogy might be that if you pump water, you can control how much water you pump in the system.

The question is, whether you want to do this. Because of course, there will be some negative environmental impact, and the impact will be different on both how much you use the internet, but also how much you can get out of it. The people who are able to generate a lot of money will be able to pass thresholds. For others, let’s say local community clubs and associations, they won’t be able to survive. It may therefore generate some exclusion. And as soon as you put prices, there are some discretionary effects.

How do you want to cope with that? That’s also the problem with pricing for the environment or taxes. In theory, taxes are a good way to give incentive, but taxes mean that the marginal value or the marginal cost of a euro depends on how much you gain, and how much money you have. So small websites may be affected, and that’s the reason why we have this net neutrality to start from. To prevent this exclusion, everyone has the right to speak out or to be on the Internet.

The problem is how you accommodate this. It’s ironical in that in a sense, the big companies are using this regulation which was created to protect the small users. Their argument would be “be careful, don’t set prices, as you would kill small actors.” But it’s a way for big companies not to pay anything. And at the end of the day, I won’t say it’s not fair, because fairness is something which is hard to define. I would say it’s clearly not efficient, and it will not go in the right direction if we want to have a sustainable future.

Adrian: And then maybe for another interview, the idea of net neutrality, I guess it’s kind of related even to philosophical positions.

Wilfried: Absolutely – it’snot an economic theory. It’s just like freedom of speech. It’s a statement. In a democratic society, you should treat all content equally, meaning that you shouldn’t have restrictions. But there is some idea that it might turn into a two-tier system. Suppose that I’m in a hospital – I want to be sure that the connection is never cut. Because the cost of having a connection failure in those contexts is too high. Suppose that I’m in the middle of a critical process, something related to security or healthcare. Maybe you want to have this type of agreement.  

But then if you start this, it means that you’re creating a different layer. From an economic point of view, I say that’s probably reasonable. To have different layers, people can have different needs, different willingness to pay for security and for capacity. But there are different dimensions. And it’s good that those type of decisions are taken into account.

As an economist – this this was the topic of an earlier paper I wrote – I would say that yes, you should implement some types of differentiation. But now, as a decision maker, taking into account not only the economic aspect but also the other aspects, I must admit that I understand why people may have different views.

Adrian: Wilfred, in the making of the paper, did you find anything surprising, unexpected in the process?

Wilfried: Well, the unexpected thing was first coming to understand how fast the Internet is affecting the environment. It was nothing like this ten years ago. And now it’s increasing all the time. And as I said, to some extent because of our use of Internet, and to a greater extent because of our devices. This I’ve learned. And once again, it all boils down to what we do as individuals.

The responsibility of the people, of us, as individuals, as a society, is very important. You can have all the regulations you want but if people do not realize in their everyday life that they have an impact, we won’t find a solution.

Adrian: Thank you very much, Wilfred.

Wilfried: Thanks for your interest in my work.

Useful links:

• Link up with Profs. Wilfried Sand-Zantman and Adrian Zicari on LinkedIn
• Read a related article: How Asian Cultural Values Can Help Define Cyber-civilization Governance
• Discover ESSEC Business School
• Apply for ESSEC Master’s in Management Grande Ecole programme.

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