Volume-based pricing with guaranteed data rate

TLDR: This paper analyzes the impact of volume-based pricing scheme on user behavior and provider's profit when the provider wants to guarantee, with a certain probability, a minimum data rate for each user.

Abstract: Over the past few years, many major wireless providers restricted their unlimited data plans and replaced them with limited-size fixed-price data packages. While this could be perceived as a disadvantage for customers, it helps the cellular wireless providers to reduce the traffic intensity at their base stations. Then the lower traffic intensity leads to a better service quality and higher rates for concurrently connected users. Hence, there is a trade-off between the data volume and the data rates attributed to the users. Therefore, to avoid the adverse effect of service inaccessibility, providers should carefully set the size of their data packages. This paper analyzes the impact of volume-based pricing scheme on user behavior and provider's profit when the provider wants to guarantee, with a certain probability, a minimum data rate for each user. First, we analyze the probability of spectrum shortage for data. Then, the optimum values of price and data volume cap are analyzed based on service parameters.