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A Pricing Model of GPRS Networks with Wi-Fi Integration

A Pricing Model of GPRS Networks with Wi-Fi Integration. Saravut Yaipairoj (Speaker) Dr. Fotios C. Harmantzis Vinoth Gunasekaran PerfEcNet Research Group Telecommunications Management Stevens Institute of Technology Hoboken, NJ USA syaipair@stevens.edu www.stevens.edu/perfectnet. Agenda.

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A Pricing Model of GPRS Networks with Wi-Fi Integration

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  1. A Pricing Model of GPRS Networks with Wi-Fi Integration Saravut Yaipairoj (Speaker) Dr. Fotios C. Harmantzis Vinoth Gunasekaran PerfEcNet Research Group Telecommunications Management Stevens Institute of Technology Hoboken, NJ USA syaipair@stevens.edu www.stevens.edu/perfectnet

  2. Agenda • GPRS vs Wi-Fi • Deployment of Wi-Fi Networks • Architectures of GPRS networks with Wi-Fi integration • Tight coupling • Loose coupling • Pricing model of GPRS integrated with Wi-Fi • Demand functions • Revenue from integrated and non-integrated networks • Price setting for Wi-Fi connection fee • Numerical results • Conclusion

  3. GPRS vs Wi-Fi • For certain wireless services, technologies being used for different applications can now be seen as alternative solutions. • GPRS offers: • wide service coverage • Costly and limited transmission rate • Wi-Fi offers: • more economical services, higher transmission rate • limited coverage. • By integrating both technologies, network operators can offer broadband wireless services that are comparable to 3G (3G-like services) • Clearly, the integration would complicate the pricing issues.

  4. Deployment of Wi-Fi Networks • Home and businesses • The service is offered without charge. • The possibility of users open up their access points for public=>requires sophisticated pricing scheme. • Micro carriers • Starbucks, Border bookstores • The carriers set up their own access points and maintain customer and billing relationship with subscribers

  5. Deployment of Wi-Fi Networks • Wi-Fi startups • Boingo, Wayport • The operators aggregate the networks provided by micro carriers and provide single access to the end users. • Wi-Fi services offered by cellular operators • The operator partner with the micro-carriers or aggregators or they can roll out their own Wi-Fi networks. • The operator can offer services comparable to 3G

  6. Architecture of GPRS integrated with Wi-Fi networks: Tight coupling • Tight coupling architecture=>the WLAN is connected to the GPRS core network in the same manner as any other radio access networks (RAN). The WLAN data traffic goes through the GPRS core network before reaching the external PDNs

  7. Architecture of GPRS integrated with Wi-Fi networks: Loose Coupling • Loose Coupling Architecture=>WLAN is deployed as an access network complementary to the GPRS network. The WLAN utilize the user databases in the GPRS network but feature no data interfaces to GPRS core network. Wi-Fi data traffic goes directly to the operator’s IP network or External PDNs.

  8. Pricing model for GPRS with Wi-Fi integration • The cost of transferring data over GPRS networks is much higher than that of Wi-Fi networks • GPRS networks are more convenient to users since the network has larger coverage • Pricing of their services will influence the usage in each network.

  9. A User is initially in the GPRS coverage. The user has two options: he can either transfer data over GPRS network paying higher price, or he can search for Wi-Fi hotspots and pay flat connection fee. There will be one common AAA server and billing system maintained by the cellular operators for all integrated hotspots Pricing model for GPRS with Wi-Fi integration (cont.)

  10. Demand function • The ratio between the price charged by GPRS netoworks and price charged Wi-Fi will determine the usage of each networks=>the use of demand function. • Demand function describes the reaction of users to the change of price [Odlyzko] • Pg and Pw are price charged by GPRS (usage charge) and Wi-Fi (connection fee) respectively, D is the percentage of users willing to pay Pg (1)

  11. Demand function (cont.) (2) rg = charging rate per MB for GPRS network rw= connection fee for Wi-Fi hotspots v = session volume in MB

  12. Revenue from integrated networks • The average revenue due to integration can be determined by the weighted sum of the revenue created by the GPRS networks and Wi-Fi networks based on their corresponding demand. (3) Rint=Average revenue of GPRS integrated with Wi-Fi ($/user/connection)

  13. Demand for GPRS network without Wi-Fi • In this case, the GPRS users do not have an alternative to migrate their traffic. The user demand using non-integrated GPRS network would be higher than that with integration. (4) K is a constant Average revenue of non-integrated GPRS => (5)

  14. Wi-Fi connection fee (price setting) • Wi-Fi connection fee influences GPRS users to transfer their traffic in a more economical Wi-Fi networks, which improves the GPRS performance by offloading traffic into Wi-Fi networks. • The connection fee can be obtained from the demand function described earlier • To obtain the optimal Wi-Fi connection fee for certain user demand, the distribution of session volume (v)in GPRS networks with integration is required. • Kilpi shows that the GPRS sessions for more than 2MB are very few. (6)

  15. Numerical results • Assumptions • Users want to transmit relatively big files (>500kB) • Usage charge of GPRS networks is fixed at $6/MB • Wi-Fi connection fee is flat. Users can transmit or receive as much traffic as they want during a connection. • For integrated networks, users have access to Wi-Fi hotspots if they seek for them. The only incentive that drives them to hotspots is pricing

  16. Numerical Results (cont.) When usage per connection increases, users would be influenced By price incentive to transmit their traffic over Wi-Fi hotspots, Resulting in additional revenue.

  17. Numerical results (cont.) We could think of Wi-Fi connection fee that yields the largest difference between these two revenue curves More revenue but less traffic migration More traffic migration but less revenue Largest difference in revenue

  18. To offload GPRS traffic to Wi-Fi, Wi-Fi connection fees must be set appropriately so that they urge GPRS users to migrate. The result illustrates the price elasticity of demand for certain session volume. Wi-Fi Connection Fee vs Data Volume Less sensitive to the change in price More sensitive to the change in price

  19. Conclusions • We propose a simple but effective pricing model for GPRS networks integrated with Wi-Fi. • The use of demand function to describe the response of users based on the price charged in each network. • By integrating two technologies together, operators can attract new customers with value added services provided by Wi-Fi networks, which reduces the churn. • GSM/GPRS operators can delay their 3G deployments as the integration could offer 3G-like services.

  20. Future Works • The optimal Wi-Fi connection fee charged to GPRS users which maximizes the overall revenue in the integrated networks. • The distribution of GPRS session volume. • The performance improvement of GPRS networks as a result of traffic migration to Wi-Fi networks.

  21. Thank you Saravut Yaipairoj (Speaker) Dr. Fotios C. Harmantzis Vinoth Gunasekaran PerfEcNet Research Group Telecommunications Management Stevens Institute of Technology Hoboken, NJ USA syaipair@stevens.edu

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