TY - GEN
T1 - Pricing under constraints in access networks
T2 - IEEE INFOCOM 2010
AU - Hande, Prashanth
AU - Chiang, Mung
AU - Calderbank, Robert
AU - Zhang, Junshan
N1 - Copyright:
Copyright 2010 Elsevier B.V., All rights reserved.
PY - 2010
Y1 - 2010
N2 - This paper investigates pricing of Internet connectivity services in the context of a monopoly ISP selling broadband access to consumers. We first study the optimal combination of flat-rate and usage-based access price components for maximization of ISP revenue, subject to a capacity constraint on the datarate demand. Next, we consider time-varying consumer utilities for broadband data rates that can result in uneven demand for data-rate over time. Practical considerations limit the viability of altering prices over time to smoothen out the demanded datarate. Despite such constraints on pricing, our analysis reveals that the ISP can retain the revenue by setting a low usage fee and dropping packets of consumer demanded data that exceed capacity. Regulatory attention on ISP congestion management discourages such "technical" practices and promotes economics based approaches. We characterize the loss in ISP revenue from an economics based approach. Regulatory requirements further impose limitations on price discrimination across consumers, and we derive the revenue loss to the ISP from such restrictions. We then develop partial recovery of revenue loss through non-linear pricing that does not explicitly discriminate across consumers. While determination of the access price is ultimately based on additional considerations beyond the scope of this paper, the analysis here can serve as a benchmark to structure access price in broadband access networks.
AB - This paper investigates pricing of Internet connectivity services in the context of a monopoly ISP selling broadband access to consumers. We first study the optimal combination of flat-rate and usage-based access price components for maximization of ISP revenue, subject to a capacity constraint on the datarate demand. Next, we consider time-varying consumer utilities for broadband data rates that can result in uneven demand for data-rate over time. Practical considerations limit the viability of altering prices over time to smoothen out the demanded datarate. Despite such constraints on pricing, our analysis reveals that the ISP can retain the revenue by setting a low usage fee and dropping packets of consumer demanded data that exceed capacity. Regulatory attention on ISP congestion management discourages such "technical" practices and promotes economics based approaches. We characterize the loss in ISP revenue from an economics based approach. Regulatory requirements further impose limitations on price discrimination across consumers, and we derive the revenue loss to the ISP from such restrictions. We then develop partial recovery of revenue loss through non-linear pricing that does not explicitly discriminate across consumers. While determination of the access price is ultimately based on additional considerations beyond the scope of this paper, the analysis here can serve as a benchmark to structure access price in broadband access networks.
UR - http://www.scopus.com/inward/record.url?scp=77953305820&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=77953305820&partnerID=8YFLogxK
U2 - 10.1109/INFCOM.2010.5461954
DO - 10.1109/INFCOM.2010.5461954
M3 - Conference contribution
AN - SCOPUS:77953305820
SN - 9781424458363
T3 - Proceedings - IEEE INFOCOM
BT - 2010 Proceedings IEEE INFOCOM
Y2 - 14 March 2010 through 19 March 2010
ER -