SDP research papers can be roughly categorized by the different types of pricing that they investigate. We consider 15 such topics here. If you know of a paper we missed, let us know.

Flat-rate pricing (6)

Flat-rate pricing refers to a fixed fee charged for network access, irrespective of the usage volume. Historically, ISPs have charged users flat monthly access fees due to their cheap implementation, easy operation, and simplicity for users. However, as demand for data has grown over the past few years, some users have taken advantage of unlimited flat-rate plans to consume enormous amounts of data each month. Consequently, most "unlimited" data plans now come with de facto usage caps above which users’ speeds are throttled.

The Economic Effects of Sharing Femtocells

S.-Y. Yun, Y. Yi, D.-H. Cho, and J. Mo  IEEE Journal on Selected Areas in Communications, 30(3), 595-606, 2012

Femtocells are a promising technology for handling exponentially increasing wireless data traffic. Although extensive attention has been paid to resource control mechanisms, for example, power control and load balancing in femtocell networks, their success largely depends on whether operators and users accept this technology or not. In this paper, we study the economic aspects of femtocell services for the case of monopoly market, and aim to answer questions on operator's revenue, user surplus, and social welfare by considering practical service types and pricing strategies. We consider three user subscription services, that is, users can access only macro BSs (mobile-only), or deploy femto BSs in their house and open / exclusively use their femto BSs (open- / closed-femto). For pricing strategies, flat pricing and partial volume pricing are exploited. The main messages include the following: 1) open-femto service is beneficial to both users and providers; 2) in flat pricing, the impact on operator revenue of allowing or blocking the access of mobile-only users to open femto BSs is minor; and 3) compared with partial volume pricing, flat pricing is advantageous to the operator when users are sensitive to price.

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Flat -- The minimalist price

L. Anania and R. J. Solomon  L. W. McKnight and, J. P. Bailey, Eds., Internet Economics. MIT Press, Cambridge, MA, 91-118, 1997

An abstract is not available.

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The Price of Simplicity

S. Shakkotai, R. Srikant, A. Ozdaglar and D. Acemoglu  IEEE Journal on Selected Areas in Communications, 26(7): 1269-1276, 2008

We study revenue-maximizing pricing by a service provider in a communication network and compare revenues from simple pricing rules to the maximum revenues that are feasible. In particular, we focus on flat entry fees as the simplest pricing rule. We provide a lower bound for the ratio between the revenue from this pricing rule and maximum revenue, which we refer to as the price of simplicity. We characterize what types of environments lead to a low price of simplicity and show that in a range of environments, the loss of revenue from using simple entry fees is small. We then study the price of simplicity for a simple non-linear pricing (price discrimination) scheme based on the Paris Metro Pricing. The service provider creates different service classes and charges differential entry fees for these classes. We show that the gain from this type of price discrimination is small, particularly in environments in which the simple entry fee pricing leads to a low price of simplicity.

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Economics and Information Systems

T. Hendershott  Elsevier, Amsterdam, Chapter 2, 4–9, 2006

No abstract included

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Pricing and provisioning of quality-differentiated services

P. Varaiya  Proceedings of the Information Theory and Networking Workshop, 1999

Summary form only given. Although flat-rate pricing is the predominant form in which Internet access is sold, that form of pricing is unviable. Flat-rate pricing encourages waste and requires 20 percent of users who account for 80 percent of the traffic to be subsidized by other users and other forms of revenue. Furthermore, flat-rate pricing makes it difficult to offer quality-differentiated services. This study is based on the demand for quality-differentiated Internet access as revealed in an ongoing market trial called INDEX (Internet Demand Experiment). Data from the experiment will be used to argue that usage-based pricing brings large benefits to users and service providers. Also, there are many plausible ways in which quality-differentiated access can be converted into a commodity or service plan and offered for sale. Service providers must take into account the fact that the commodity form affects demand or consumer willingness to pay

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Internet pricing and the history of communications

A. Odlyzko  Computer Networks, 36(5-6): 493—517, 2001

There are repeating patterns in the histories of communication technologies, including ordinary mail, the telegraph, the telephone, and the Internet. In particular, the typical story for each service is that quality rises, prices decrease, and usage increases to produce increased total revenues. At the same time, prices become simpler. The historical analogies of this paper suggest that the Internet will evolve in a similar way, towards simplicity. The schemes that aim to provide differentiated service levels and sophisticated pricing schemes are unlikely to be widely adopted. Price and quality differentiation are valuable tools that can provide higher revenues and increase utilization efficiency of a network, and thus in general increase social welfare. Such measures, most noticeable in airline pricing, are spreading to many services and products, especially high-tech ones. However, it appears that as communication services become less expensive and are used more frequently, those arguments lose out to customers' desire for simplicity. In practice, user preferences express themselves through willingness to pay more for simple pricing plans. In addition, there is a strong `threshold' effect to usage-sensitive billing. Even tiny charges based on utilization decrease usage substantially. In a rapidly growing market, it is in the service providers' interest to encourage usage, and that argues for simple, preferably flat rate, pricing. Historical evidence suggests that when service costs decrease, such arguments prevail over the need to operate a network at high utilization levels and to extract the highest possible revenues.

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