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.

Two-sided pricing (15)

Two-sided pricing, sometimes known as sponsored content, allows content providers to subsidize users’ cost of consuming data. Some service providers offer promotional forms of sponsored content, in which data plans include free access to specific apps like music streaming. More recently, AT&T in January 2014 announced that it would allow any content provider to sponsor data for some specific apps. Some forms of sponsored content allow content providers to pay fees to guarantee higher QoS for their users, raising concerns over “network neutrality” or the idea that all traffic, regardless of content, should be treated equally within the network.

A Novel Stackelberg-Bertrand Game Model for Pricing Content Provider

Cheng Zhang, Bo Gu, Kyoko Yamori, Sugang Xu, and Yoshiaki Tanaka  Proceedings of MobiMedia 2015

With the popularity of smart devices such as smartphones, tablets, contents that traditionally be viewed on a personal computer, can also be viewed on these smart devices. The demand for contents thus is increasing year by year, which makes the content providers (CPs) get high revenue from either users' subscription or advertisement. On the other hand, Internet service providers (ISPs), who keep investing in the network technology or capacity to support the huge traffic generated by contents, do not benefit directly from the content traffic. One choice for ISPs is to charge CPs to share the revenue from the huge content traffic. Then ISPs will have enough incentives to invest in network infrastructure to improve quality of services (QoS), which eventually benefit CPs and users. This paper presents a novel economic model called Stackelberg-Bertrand game to capture the interaction and competitions among ISPs, CPs and users when ISPs charge CPs. A generic user demand function is assumed to capture the sensitivity of demand to prices of ISPs and CPs. The numerical results show that the price elasticity of ISP and CP plays an important part on the payoff of the ISP and CP.

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TDS: Time-Dependent Sponsored Data Plan for Wireless Data Traffic Market

Liang Zhang, Weijie Wu and Dan Wang  Proceedings of IEEE INFOCOM 2016

Mobile data demand is increasing tremendously, and thus new pricing models are in urgent need. One promising new pricing scheme is the “sponsored data plan”, i.e., end users may enjoy free access to contents from certain content providers, while these content providers will pay ISPs for corresponding traffic consumed by end users. Proven a number of advantages, the sponsored data plan is still in its infancy. In this paper, we explore some potential of further development of this plan. We extend the design space and propose the idea of time-dependent sponsoring, i.e, content providers can decide when to sponsor how much fractions of traffic. The key intuition is by migrating some traffic consumption from peak to valley times, bandwidth resources can be better utilized. We formulate a game model to study the interactions between the ISP, CPs and users, and derive the optimal sponsoring fractions over various times under this new plan. We show that all parties involved can benefit from this plan, and social welfare increases. We believe our proposal, i.e., time-dependent sponsoring, provides important insights to potential development of the sponsored data plan.

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Sponsoring Mobile Data: An Economic Analysis of the Impact on Users and Content Providers

C. Joe-Wong, S. Ha and M. Chiang  Proceedings of IEEE INFOCOM, 2015

In January 2014, AT&T introduced sponsored data to the U.S. mobile data market, allowing content providers (CPs) to subsidize users' cost of mobile data. As sponsored data gains traction in industry, it is important to understand its implications. This work considers CPs' choice of how much content to sponsor and the implications for users, CPs, and ISPs (Internet service providers). We first formulate a model of user, CP, and ISP interaction for heterogeneous users and CPs and derive their optimal behaviors. We then show that these behaviors can reverse our intuition as to how user demand and utility change with different user and CP characteristics. While all three parties can benefit from sponsored data, we find that sponsorship disproportionately favors less cost-constrained CPs and more cost-constrained users, exacerbating CP inequalities but making user demand more even. We also show that users' utilities increase more than CPs' with sponsored data. We finally illustrate these results in practice through numerical simulations with data from a commercial pricing trial and introduce a framework for CPs to decide which, in addition to how much, content to sponsor.

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Sponsored Data Plan: A Two-Class Service Model in Wireless Data Networks

L. Zhang, W. Wu and D. Wang  Proceedings of ACM SIGMETRICS 2015

Data traffic demand over the Internet is increasing rapidly, and it is changing the pricing model between Internet service providers (ISPs), content providers (CPs) and end users. One recent pricing proposal is sponsored data plan, i.e., when accessing contents from a particular CP, end users do not need to pay for that volume of traffic consumed, but the CP will sponsor for this data consumption. In this paper, our goal is to understand the rationale behind this new pricing model, as well as its impacts to the wireless data market, in particular, who will benefit and who will be hurt from this scheme. We build a two-class service model to analyze the consumers’ traffic demand under the sponsored data plan with consideration of QoS. We use a two-stage Stackelberg game to characterize the interaction between CPs and the ISP and reveal a number of important findings. Our conclusions include: 1) When the ISP’s capacity is sufficient, the sponsored data plan benefits consumers and CPs in the short run, but the ISP does not have incentives to further improve its service in the long run. 2) When ISP’s capacity is insufficient, the ISP and end users may achieve a winwin trade, while the ISP and CPs always compete for the revenue. 3) The sponsored data plan may enlarge the unbalance in revenue distribution between different CPs; CPs with higher unit income and poorer technology support are more likely to prefer the sponsored data plan.

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Network pricing and rate allocation with content provider participation

P. Hande, M. Chiang, R. Calderbank and S. Rangan  Proceedings of IEEE INFOCOM, 2009

Pricing content-providers for connectivity to end- users and setting connection parameters based on the price is an evolving model on the Internet. The implications are heavily debated in telecom policy circles, and some advocates of "Network Neutrality" have opposed price based differentiation in connectivity. However, pricing content providers can possibly subsidize the end-user's cost of connectivity, and the consequent increase in end-user demand can benefit ISPs and content providers. This paper provides a framework to quantify the precise trade-off in the distribution of benefits among ISPs, content-providers, and end-users. The framework generalizes the well-known utility maximization based rate allocation model, which has been extensively studied as an interplay between the ISP and the end-users, to incorporate pricing of content-providers. We derive the resulting equilibrium prices and data rates in two different ISP market conditions: competition and monopoly. Network neutrality based restriction on content-provider pricing is then modeled as a constraint on the maximum price that can be charged to content-providers. We demonstrate that, in addition to gains in total and end- user surplus, content-provider experiences a net surplus from participation in rate allocation under low cost of connectivity. The surplus gains are, however, limited under monopoly conditions in comparison to competition in the ISP market.

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Revenue sharing among ISPs in two-sided markets

Y. Wu, H. Kim, P. H. Hande, M. Chiang and D. H. K. Tsang  Proceedings of IEEE INFOCOM, 2011

In this paper, we study the revenue sharing and rate allocation for Internet Service Providers (ISPs) that jointly provide network connectivity between content providers and end-users. Without colluding, each ISP may selfishly set a high transit-price to cover its cost and maximize its own profit, which inevitably results in a loss in social profit. We model this noncooperative interaction between an “eyeball” ISP and a “content” ISP as a Stackelberg game and quantify the resulting loss in social profit. To recover the profit loss, we propose a revenue sharing contract between ISPs by modeling them as a supply chain to deliver traffic in a two-sided market. Parameterized by the profit division factor, the sharing contract coordinates ISPs' objectives such that they aim to maximize the social profit self-incentively. We further propose a Nash bargaining process to determine the profit division factor such that all ISPs are simultaneously better off compared to the noncooperative equilibrium.

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Network neutrality on the Internet: A two-sided market analysis

N. Economides and J. Tag  Information Economics and Policy, 24(2): 91—104, 2012

We discuss network neutrality regulation of the Internet in the context of a two-sided market model. Platforms sell broadband Internet access services to residential consumers and may set fees to content and application providers on the Internet. When access is monopolized, cross-group externalities (network effects) can give a rationale for network neutrality regulation (requiring zero fees to content providers): there exist parameter ranges for which network neutrality regulation increases the total surplus compared to the fully private optimum at which the monopoly platform imposes positive fees on content providers. However, for other parameter values, network neutrality regulation can decrease total surplus. Extending the model to a duopoly of residential broadband ISPs, we again find parameter values such that network neutrality regulation increases total surplus suggesting that network neutrality regulation could be warranted even when some competition is present.

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Net neutrality and quality of service

E. Altman, J. Rojas, S. Wong, M. K. Hanawal and Y. Xu  Proceedings of GAMENETS, 2011

2010 has witnessed many public consultations around the world concerning Net neutrality. A second legislative phase that may follow, could involve various structural changes in the Internet. The status that the Internet access has in Europe as a universal service evolves as the level of quality of service (QoS) to be offered improves. If guarantees on QoS are to be imposed, as requested by several economic actors, it would require introducing new indicators of quality of services, as well as regulation legislation and monitoring of the offered levels of QoS. This tendency in Europe may change the nature of the Internet from a best effort network to, perhaps, a more expensive one, that offers guaranteed performance. This paper presents an overview of the above issues as well as an overview of recent research on net-neutrality, with an emphasis on game theoretical approaches.

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Application neutrality and a paradox of side payments

S. Caron, G. Kesidis and E. Altman  Proceedings of the ReArch Workshop, 2010

The ongoing debate over net neutrality covers a broad set of issues related to the regulation of public networks. In two ways, we extend an idealized usage-priced game-theoretic framework based on a common linear demand-response model [1]. First, we study the impact of "side payments" among a plurality of Internet service (access) providers and content providers. In the non-monopolistic case, our analysis reveals an interesting "paradox" of side payments in that overall revenues are reduced for those that receive them. Second, assuming different application types (e.g., HTTP web traffic, peer-to-peer file sharing, media streaming, interactive VoIP), we extend this model to accommodate differential pricing among them in order to study the issue of application neutrality. Revenues for neutral and non-neutral pricing are compared for the case of two application types.

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Economic models of sponsored content in wireless networks with uncertain demand

M. Andrews, U. Ozen, M. I. Reiman and Q. Wang  Proceedings of the 2nd IEEE International Workshop on Smart Data Pricing (SDP), 2013

The interaction of a content provider with end users on an infrastructure platform built and maintained by a service provider can be viewed as a two-sided market. Content sponsoring, i.e., charging the content provider instead of viewers for resources consumed in viewing the content, can benefit all parties involved. Without being charged directly or having it counted against their monthly data quotas, end users will view more content, allowing the content provider to generate more advertising revenue, extracted by the service provider to subsidize its investment and operation of the network infrastructure. However, realizing such gains requires a proper contractual relationship between the service provider and content provider. We consider the determination of this contract through a Stackelberg game. The service provider sets a pricing schedule for sponsoring and the content provider responds by deciding how much content to sponsor. We analyze the best strategies for the content provider and service provider in the event that the underlying demand for the content is uncertain. Two separate settings are defined. In the first, end users can be charged for non-sponsored views on a per-byte basis. In the second we extend the model to the more common case in which end users purchase data quotas on a periodic basis. Our main conclusion is that a coordinating contract can be designed that maximizes total system profit. Moreover, the additional profit due to sponsoring can be split between the content provider and service provider in an arbitrary manner.

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Sponsoring content: Motivation and pitfalls for content service providers

L. Zhang and D. Wang  Proceedings of the 3rd IEEE International Workshop on Smart Data Pricing (SDP), 2014

With the popularity of bandwidth-intensive mobile applications and mobile devices, the data traffic is increasing fast nowadays. This poses huge burden to the Internet service providers (ISPs) to support such wireless data traffic as they need to invest on developing advance networks, e.g., 4G, or expending the capacity of the current networks in a much faster pace. One way to keep up financing such investment is to transfer the costs to the end users. There are studies on new payment models, e.g., time-dependent pricing. An alternative way is sponsored content. More specifically, the content service providers (CSPs) can sponsor the end users for the traffic of viewing their content. As an example, Google, with India ISPs, is currently sponsoring Gmail, Google+, etc. for its end users. Nevertheless, much is unknown about the impact of such strategy on the CSPs of different scales, more specifically, whether richer CSPs may harvest more advantage on the competitive edge. In this paper, we first analyze the interplay among CSPs, a monopolistic ISP and end users. We conclude: 1) small CSPs and large (or rich) CSPs all may have part incentive to sponsor content for its end users when the monopolistic ISP cannot discriminate the charging price of CSPs; and 2) otherwise, none of them has the incentive to adopt this strategy. We then study the effect of competition from short-run (i.e., market shares are fixed) and long-run (i.e., market shares are dynamic) perspectives in the market with one small CSP and one large CSP. We show that the small CSP (or large CSP) may benefit more from the adoption of sponsored content for the short-run (or long-run) competition.

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Implementing sponsored content in wireless data networks

M. Andrews  Proceedings of Allerton, 2013

Telecom service providers are increasingly looking to additional sources of revenue in order to cover the network infrastructure costs associated with the bandwidth explosion. One mechanism that has attracted attention is known as “sponsored content” and allows for content providers to sponsor their content and thereby make it free for end users. In this paper we examine some of the implementation and modeling issues associated with the design of a sponsored content system. In particular we present a general framework that assumes a set of users with an underlying desire to make a sequence of requests for certain content. Each content provider has the option to sponsor the content and therefore increase the chance that a potential view of the content will actually occur. A key feature of our model is that users pay for unsponsored content via the purchase of large monthly quotas.

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A simple two-sided market model with side-payments and ISP service classes

G. Kesidis  Proceedings of the 3rd IEEE International Workshop on Smart Data Pricing (SDP), 2014

We consider a simple two-sided market model of an Internet Service (access) Provider (ISP) and Content Provider (CP, over commodity Internet access) on a platform of user-demand. Though the model does not consider provider competition and resource congestion, it does consider advertising revenue, multiple ISP service classes, separate price sensitives for each provider type, and side-payments from CP to ISP [16]. We argue that side-payments are effectively in play even under network-neutrality regulations owing to considerations in Service-Level Agreements (SLAs) of asymmetries in traffic aggregates at boundaries (NNIs) between eyeball ISPs and transit ISPs, the latter serving the CPs remote to the eyeball ISPs. Finally, we consider a game between content providers based on “managed” and commodity-Internet-access services.

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The disruptive effect of open platforms on markets for wireless services

A. Lahiri, R. M. Dewan and M. Freimer  Journal of Management Information Systems, 27(3): 81—110, 2011

Application-based pricing is common in telecommunications. Wireless carriers charge consumers more per byte of traffic for text messages than they do for wireless surfing or voice calls. Such pricing is possible because carriers and handset manufacturers have the ability to tag and meter each application. While tagging and metering are possible in the case of closed platforms such as iPhone, they are not in the case of open platforms such as Android. Android is open source with open application programming interfaces, and anyone can develop applications for it. Because the carriers have little control over applications, Android is inherently disruptive of differential pricing across applications. Users and neutrality advocates support Android, believing that it can increase consumer surplus by disrupting differential pricing. However, we show that the equilibrium under differential pricing is different from the equilibrium under open platforms, and it is particularly so with regard to the sets of consumers served and the quantities consumed. With open platforms, certain consumers are either not served or they are served a quantity that is less than what they would be served under differential pricing. Consequently, the consumer surplus and the social surplus are often lower with open platforms. Similarly, firms are expected to prefer differential pricing. We show that this expectation is also not true under certain circumstances in which open platforms and neutral pricing work like a quasi-bundle.

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Pricing of wireless services: Service pricing vs. traffic pricing

A. Lahiri, R. M. Dewan and M. Freimer  Information Systems Research, 24(2): 418—435, 2013

As the ability to measure technology resource usage gets easier with increased connectivity, the question whether a technology resource should be priced by the amount of the resource used or by the particular use of the resource has become increasingly important. We examine this issue in the context of pricing of wireless services: should the price be based on the service, e.g., voice, multimedia messages, short messages, or should it be based on the traffic generated? Many consumer advocates oppose discriminatory pricing across services believing that it enriches carriers at the expense of consumers. The opposition to discrimination has grown significantly, and it has even prompted the U.S. Congress to question executives of some of the biggest carriers. With this ongoing debate on discrimination in mind, we compare two pricing regimes here. One regime, namely, service pricing, involves pricing different services differently. The other one, namely, traffic pricing, involves pricing the traffic (i.e., bytes) transmitted. We show why the common wisdom, that discriminatory pricing across services increases profits and harms consumers, may not always hold. We also show that such discrimination can increase social welfare.

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