Economists at the Phoenix Center for Advanced Legal & Economic Public Policy Studies are among those who have argued that network neutrality rules could have negative implications for consumers, ISPs and content providers as well.

The Phoenix Center published Network Neutrality and Foreclosing Market Exchange: A Transaction Cost Analysis in 2007, warning of potential damage from network neutrality proposals foreclosing or severely limiting market transactions between content providers and broadband service providers.

Phoenix Center argued that prohibiting voluntary commercial deals between ISPs and content and app providers could lead to higher consumer prices, lower ISP revenues and lower sales for content providers.

And it now appears we might have the first example of such an arrangement, which would allow ESPN (News - Alert) to subsidize use of mobile bandwidth by viewers of its content, being explored. In one possible implementation, ESPN content consumption would not count against a usage cap, much as downloading Kindle content from Amazon does not count against a usage cap.

Video content is bandwidth intensive, so usage charges will cause consumers to consume bandwidth rationally, which means avoiding ESPN and other video.

Higher cost leads to lower consumption.  Since ESPN is significantly supported by advertising revenue, lost audience means lower ad revenues.

The reduction in demand for ESPN over mobile networks also reduces the demand for mobile data plans, reducing the profits of the mobile data provider.  

If ESPN essentially becomes a “consume as much as you want for no incremental charge” service, and ESPN pays ISPs directly, it is at least possible that consumers, mobile ISPs and ESPN all can win. 

Users can consume without exceeding their caps or buying more-expensive data plans. Mobile ISPs will gain an additional revenue stream directly compensating them for video bandwidth consumption, without end users bearing the cost. 

ESPN can document higher viewership, allowing it to raise its mobile and overall ad rates, because it can demonstrate a bigger audience.

Critics will say the downside is that smaller content providers will be at a disadvantage. That is true, but not inherently abusive, as long as the sports content market remains competitive.

The inherent logic of all markets is that more favored products and services gain share. Differences in market share always will arise. 

So long as differential market share is not abused unlawfully, statistical differences (market shares) are not automatically evidence of unlawful or abusive behavior. It is the logical consequence of consumer choice.