Generating Demand Functions for Data Plans from Mobile Network Operators Based on Users’ Profiles

Abstract

The evaluation of pricing approaches for mobile data services proposed in the literature can rarely be done in practice. Evaluation by simulation is the most common practice. In these proposals demand and utility functions that describe the reaction of users to offered service prices, use traditional and arbitrary functions (linear, exponential, logit, etc.). In this paper, we present a new approach to construct a simulation model whose output can be used as an alternative method to create demand functions avoiding to use arbitrary and predefined demand functions. However, it is out of the scope of this paper to utilize them to propose pricing approaches, since the main objective of this article is to show the difference between the arbitrary demand functions used and our approach that come from users’ data. The starting point in this paper is to consider data offered from Eurostat, although other data sources could be used for the same purposes with the aim to offer more realistic values that could characterize more appropriately, what users are demanding. In this sense, some demographic and psychographic characteristics of the users are included and others such as the utilization of application usage profiles, as parameters that are included in the user`s profiles. These characteristics and usage profiles make up the user profile that will influence users’ behavior in the model. Using the same procedure, Mobile Network Operators could feed their customers’ data into the model and use it to validate their pricing approaches more accurately before their real implementation or simulate future or hypothetical scenarios. It also makes possible to segment users and make insights for decision-making. Results presented in this paper refer to a simple study case, since the purpose of the paper is to show how the proposal model works and to reveal its differences with arbitrary demand functions used. Of course, results depend on the set of parameters assigned to characterize each user’s profile.