Optimal dynamic pricing of mobile data plans in wireless communications

Xiaoyu Ma, Tianhu Deng, Mengying Xue, Zuo-Jun Max Shen and Boxiong Lan

Omega, 2017, vol. 66, issue PA, 91-105

Abstract: With smartphones sweeping the world, customers use much more data service than voice service nowadays. Because mobile data service occupies much more network capacity than voice, wireless network is frequently congested. We build a dynamic cell phone plan control model where the service provider can decide a subset of plans to open at the beginning of each period. New customers can only subscribe open plans. The dynamic plan control problem is a stochastic programming problem where the system state dimension is exponential in the number of plans and periods. In this paper, we analyze the case when the number of customers approaches positive infinity. In this limiting case, we transform the stochastic dynamic programming problem to an equivalent integer linear programming problem. In a case study, we analyze a large mobile service provider in Asia using 10,000 real individual-level data. Sensitivity analysis implies that a mobile service provider whose initial market share is low can benefit more from the dynamic data plan control.

Keywords: Dynamic plan control; Mobile data plans; Congestion effect; Stochastic dynamic programming (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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DOI: 10.1016/j.omega.2016.02.001

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