A joint technical and micro-economic investigation of pricing data services over wireless LANs

Abstract

In this paper, we analyze a wireless LAN hot-spot, based on the IEEE 802.11b protocol, and more specifically we address the issue of defining proper pricing strategies, from both perspectives of evaluating technical performance and quantifying the economic revenues. We take into account a model for users' behavior that considers the trade-off between perceived QoS and paid price. This allows us to describe all users' choices in a decentralized manner, so that the transmission rate of each node is driven both by service requirements and by the customer's willingness to pay. After this setup, the multiple users' medium access mechanism is considered through simulation based on ns-2. Within this model, the network performance is evaluated and discussed. First, we investigate the provider's task of having a suitable price policy that gives a satisfactory income. This is connected with the goal of achieving high throughput, but is also dependent on a price setting that is accepted by the users and optimizes resource usage. Finally, we present numerical results which can provide practical insight for pricing setup in a wireless LAN hot-spot.