Analytic Approach of Internet Pricing Scheme Model Based on function of Bandwidth Diminished with Increasing Bandwidth

Abstract

Along with the changing times, the internet is becoming essential for everyday life. As the internet service providers, ISPs are required to provide a good service so as to give satisfaction to consumers at a low price. However, ISPs are expected to not only take into account customer satisfaction, but also take into account the advantages gained by considering all the factors that exist. Therefore, ISPs are given the option of pricing schemes, namely flat fee, usage-based, and two part tariff pricing schemes to be applied to the utility function as a function of bandwidth decreases with increasing bandwidth to maximize the benefits ISPs with regard to the level of user satisfaction. This study analyzed the two types of customers, namely homogeneous and heterogeneous consumers. Consumers are divided into heterogeneous consumer of willingness to pay (high end and low end) and with different consumption levels (high demand and low demand).In the case of consumers with homogeneous and heterogeneous consumer of willingness to pay (high end and low end), optimal pricing scheme is obtained if the ISP uses a flat fee and a two-part tariff schemes. As for heterogeneous consumers with different consumption levels (high demand and low demand), the scheme of two part tariff is the optimal scheme to generate maximum profits.