To Accept Or Not To Accept: The Question Of Supplemental Discount Offers In Mobile Data Plans

Authors:
Madhumitha Harishankar Carnegie Mellon University, USA
Nagarjun Srinivasan Carnegie Mellon University, USA
Carlee Joewong Carnegie Mellon University, USA
Patrick Tague Carnegie Mellon University, USA

Abstract:

As demand for Internet usage increases, Internet service providers (ISPs) have begun to explore pricing-based solutions to dampen data demand. However few explicitly consider the dual problem of monetizing idle network capacity at uncongested times. PopData is a recent initiative from Verizon that does so by offering supplemental discount offers (SDOs) at these times, in which users can pay a fixed fee in exchange for unlimited data in the next hour. This work is the first of its kind to assess the benefits and viability of SDOs by modeling user and ISP decisions as a game, considering both overall monthly decisions and hour-to-hour decisions throughout the month. We first use our monthly model to show that users are generally willing to accept some SDO offers, allowing the ISP to increase its revenue. We then show that users face a complex hourly decision problem as to which SDOs they should accept over their billing cycles, since they are unaware of their exact future needs or when future SDOs will be made. The ISP faces a similarly challenging problem in deciding when to offer SDOs so as to maximize its revenue, subject to users' decisions. We develop optimal decision criteria for users and ISPs to decide whether to make or accept SDO offers. Our analysis shows that both users and ISPs can benefit from these offers, and we verify this through numerical experiments on a one-week trace of 20 cellular data users. We find that ISPs can exploit user uncertainty in when future SDOs will be made to optimize its revenue.

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