Pricing the Volume-Based Data Services in Cellular Wireless Markets

Abstract

Over the past few years, many major wireless providers restricted their unlimited data plans and replaced them with limited-size fixed-price data packages. While this could be perceived as a disadvantage for customers, it helps the cellular wireless providers to reduce the traffic intensity at their base stations and this leads to a better service quality and higher rates for concurrently connected users. Hence, there is a tradeoff between the data volume and the data rates attributed to the users. To avoid the adverse effect of service inaccessibility, the cellular providers should carefully set the size and pricing of their data packages. Toward this end, the providers need a model that, together with proper market information, would allow to set the best prices for volume-based data and estimate the acceptable quantity of subscribers and their average data rate. In this paper, we propose such a model that quantifies the relationship between pricing and various market/system parameters such as data volume size, user budget, data rate, and service blocking probability. In particular, we formulate a set of revenue optimization problems for different spectrum assignment criteria like shared-carrier and dynamic sub-carrier allocation. Finally, several realistic scenarios are investigated in which the optimal network parameters are computed.