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This Article explains that the Internet is inherently non-neutral, and that this non-neutrality stems from the very architectural features that make the Internet a cost-effective means of communication. I argue that the ongoing network neutrality debate is better understood as being about the allocation of the costs of the Internet infrastructure. Instead of focusing on whether different parties are “neutrally” charged for Internet access, this Article focuses on how best to allocate these costs to maximize the value of the infrastructure. To this end, this Article proposes a model rule, “neighbor billing,” which is based in the economics of multi-sided markets to reduce the effects of the current potential market failures without creating new ones. This rule pushes pricing decisions into the network core, which allows internal market forces to allocate costs as appropriate, without need for external regulation. Though not a perfect rule, this proposal suggests considerations of importance to the ongoing network neutrality debate.

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Virginia Journal of Law & Technology