Public Wi-Fi Monetization via Advertising

TL;DR

This paper introduces a new economic model for monetizing public Wi-Fi hotspots through premium and advertising-sponsored access, analyzing strategic interactions among stakeholders and identifying revenue optimization strategies.

Contribution

It develops a three-stage Stackelberg game model to analyze Wi-Fi monetization, revealing how revenue sharing policies influence pricing and access choices.

Findings

Ad platform's revenue sharing affects VOs' Wi-Fi prices.

VOs' prices increase with advertising concentration levels.

VOs tend to focus on one access type for higher revenue.

Abstract

The proliferation of public Wi-Fi hotspots has brought new business potentials for Wi-Fi networks, which carry a significant amount of global mobile data traffic today. In this paper, we propose a novel Wi-Fi monetization model for venue owners (VOs) deploying public Wi-Fi hotspots, where the VOs can generate revenue by providing two different Wi-Fi access schemes for mobile users (MUs): (i) the premium access, in which MUs directly pay VOs for their Wi-Fi usage, and (ii) the advertising sponsored access, in which MUs watch advertisements in exchange of the free usage of Wi-Fi. VOs sell their ad spaces to advertisers (ADs) via an ad platform, and share the ADs' payments with the ad platform. We formulate the economic interactions among the ad platform, VOs, MUs, and ADs as a three-stage Stackelberg game. In Stage I, the ad platform announces its advertising revenue sharing policy. In Stage II, VOs determine the Wi-Fi prices (for MUs) and advertising prices (for ADs). In Stage III, MUs make access choices and ADs purchase advertising spaces. We analyze the sub-game perfect equilibrium (SPE) of the proposed game systematically, and our analysis shows the following useful observations. First, the ad platform's advertising revenue sharing policy in Stage I will affect only the VOs' Wi-Fi prices but not the VOs' advertising prices in Stage II. Second, both the VOs' Wi-Fi prices and advertising prices are non-decreasing in the advertising concentration level and non-increasing in the MU visiting frequency. Numerical results further show that the VOs are capable of generating large revenues through mainly providing one type of Wi-Fi access (the premium access or advertising sponsored access), depending on their advertising concentration levels and MU visiting frequencies.