Connection-based Pricing for IoT Devices: Motivation, Comparison, and Potential Problems

Most existing data plans are data volume oriented. However, due to the small data volume from Internet of Things (IoT) devices, these plans cannot bring satisfactory monetary benefits to ISPs, but the frequent data transmission introduces substantial overhead. ISPs, such as China Telecom, propose novel data plans for IoT devices that charge users based on their total number of connections per month. How does such model differ from the current volume-oriented (VO) charging models, that is, will this bring benefit to ISPs, how does this affect the users and the network ecosystem as a whole? In this paper, we answer these questions by developing a model for connection-based pricing, i.e., frequency-oriented (FO) plans. We first discuss the motivation of connection-based pricing and formally develop the model. We then compare connection-based pricing with volume-oriented pricing. Based on such results, we predict that there may be potential problems in the future, and connection-based pricing calls for further study.