Competition in Access to Content

We study competition between users over access to content in a telecom market that includes several access providers and several content providers. We focus situations where exclusive agreements exist between content and access providers, which allows access providers to offer content services for free for their subscribers. We call access providers having such agreements ”super” providers or ”enhanced” service providers. We show that the competition between the users results in a paradoxical phenomenon in which subscribers of enhanced providers prefer to defer part of their demand to other content providers whose content is costly. We show how this phenomena can be exploited by the content providers so as to maximize their benefits.