Prioritization between asymmetric content providers

Abstract

Gautier and Somogyi (2020) showed that the monopolistic Internet service provider (ISP) can extract more surplus from consumers by giving priority to the weaker content to restore symmetry between content providers (CPs). In this study, we reexamine the issue and argue that their result depends critically on the shape of the delay cost function. We first show that under a linear delay cost, if the delay cost of contents from each CP increases with its own traffic amount, the opposite is true, that is, the ISP prefers to give priority to a strong CP, whereas it prefers to give priority to a weak CP if the delay cost of contents from an unprioritized CP decreases with its traffic amount. We confirm our insight in two specific models; the M/M/1 queuing model and the bandwidth subdivision model. We also discuss some implications of the ISP’s prioritization choice for social welfare.