Exploring Time Flexibility in Wireless Data Plans

TL;DR

This paper develops a comprehensive framework for designing and optimizing mobile data plans with time flexibility, demonstrating that increased flexibility benefits both operators and users, and enhances social welfare.

Contribution

It introduces a unified framework encompassing traditional, rollover, and credit data plans, and analytically characterizes the optimal design and market outcomes.

Findings

More flexible data mechanisms increase MNO profits.

Time flexibility improves user payoffs.

Enhanced flexibility boosts social welfare.

Abstract

Recently, the mobile network operators (MNOs) are exploring more time flexibility with the rollover data plan, which allows the unused data from the previous month to be used in the current month. Motivated by this industry trend, we propose a general framework for designing and optimizing the mobile data plan with time flexibility. Such a framework includes the traditional data plan, two existing rollover data plans, and a new credit data plan as special cases. Under this framework, we formulate a monopoly MNO's optimal data plan design as a three-stage Stackelberg game: In Stage I, the MNO decides the data mechanism; In Stage II, the MNO further decides the corresponding data cap, subscription fee, and the per-unit fee; Finally in Stage III, users make subscription decisions based on their own characteristics. Through backward induction, we analytically characterize the MNO's profit-maximizing data plan and the corresponding users' subscriptions. Furthermore, we conduct a market survey to estimate the distribution of users' two-dimensional characteristics, and evaluate the performance of different data mechanisms using the real data. We find that a more time-flexible data mechanism increases MNO's profit and users' payoffs, hence improves the social welfare.