Abstract
Purpose: The revenues for mobile data transmission overtook the revenue of voice calls for the first time in 2014 in the USA. It can be observed that demand for mobile data – largely driven by video and cloud - is increasing exponentially, while overall data revenue is rising only moderately. This will lead to insufficient revenues stream to increase investments into mobile networks and ensure quality service. Consequently, hereof network performance will deteriorate sharply. At the heart of the problem is the current global pricing regime of fixed multiple MB/GB bundles, irrespective of time of the day, intensity of usage (e.g. video vs. email) and underlying economic value of the data. A new framework is proposed as to optimize and align network capacity and implicit data value/utility, which is crucial to ensure customer satisfaction and access justice.
Methodology/Approach: The fundamental differences in pricing voice and data in voice and/or data centric networks are analysed in detail. Information has been synthesized as to develop insights into the impact of different devises and type of digital traffic for the overall performance of mobile networks. Based hereupon, a new framework for mobile data has been proposed to address the increasing misalignment between network capacity, usage and underlying data value/utility. Initial solutions have been proposed and discussed.
Findings: While voice calls are easily quantifiable and are largely predictable in its occurrence and network load implications, mobile data traffic shows very large variations depending on type of traffic. While social media messaging by many customers consumes very little capacity, consumption of video streaming by relatively few customers can lead already to network saturation.
Research Limitation/implication: Carriers set prices for a fixed amount of data – irrespective of intensity and time of data traffic - which leads to sharp spiky type of traffic patterns essentially signalling sharp overuse during busy hours coexist with large period of underused times.
Originality/Value of paper: A new framework for proposition building and particularly pricing of mobile data services is provided.Full text article
References
Albon, R., 2006. Fixed-to-Mobile Substitution, Complementarity and Convergence. Agenda, 13(4), pp.309-322.
Banerjee, A. and Ros, A.J., 2004. Patterns in global fixed and mobile telecommunications development: a cluster analysis. Growth in mobile communications. Telecommunications Policy, 28(2), pp.107-132.
Baochun, L., Nahrstedt, K. and Xue, Y., 2006. Optimal resource allocation in wireless ad hoc networks: a price-based approach. IEEE Transactions on Mobile Computing, 5(4), pp.347-364.
Basar, T. and Srikant, R., 2002. Revenue-maximizing pricing and capacity expansion in a many-user regime. In: IEEE INFOCOM, Twenty-First Annual Joint Conference of the IEEE Computer and Communications Societies, New York, New York, 23-27 June 2002. Piscataway, USA: IEEE Operations Center.
Calhoun, G., 1988. Mobile Radio Telephony. Norwood, MA: Artech House.
CTIA, 2005. Semi-Annual Wireless Industry Survey. [online] Available at: < http://www.mindfully.org/Technology/2005/Wireless-Industry-SurveyJan05.htm > [Accessed 01 January 2016].
Ernst & Young, 2013. Metrics transformation in telecommunications. [online] Ernst & Young Global Limited. Available at: < http://www.ey.com/Publication/vwluassets/metrics_transformation_in_telecommunications/%24File/metrics_transformation_in_telecommunications_eF0117.pdf > [Accessed 01 January 2016].
Fitkov-Norris, E.D., 2003. Optimal dynamic pricing strategies for mobile communication networks. Ph. D. University of London.
Gartner Group, 2009. Web usage vs. operating system. [online] Available at: < http://demo.tizra.com/Morgan-Stanley-Economy-Internet-Trends-October-20-2009/39 > [Accessed 01 February 2016].
GSMA, 2013. The Rise of Connected Devices Will Drive Mobile Operator Data Revenues Past Voice Revenues Globally by 2018. [online] Available at: < https://www.gsma.com/newsroom/press-release/gsma-the-rise-of-connected-devices-will-drive-mobile-operator-data-revenues-past-voice-revenues-globally-by-2018/ > [Accessed 10 February 2017].
GSMA, 2014. The Mobile Economy 2014. [online] Available at: < https://www.gsmaintelligence.com/research/?file=bb688b369d64cfd5b4e05a1ccfcbcb48&download > [Accessed 04 February 2016].
GSMA, 2016. The Mobile Economy 2016. [online] Available at: < https://www.gsma.com/mobileeconomy/archive/GSMA_ME_2016.pdf > [Accessed 04 February 2017].
Kessler, S., 2012. Apples’s App Store hits 25 Billion Downloads, [online] 03 March 2012. Available at: < http://mashable.com/2012/03/03/app-store-25-billion-downloads/ > [Accessed 01 February 2016].
Khanfir, A. and Fitkov-Norris, E.D., 2000. Dynamic pricing in mobile communication systems. In: IEEE Xplore, First International Conference 3G Mobile Communication Technologies. London, UK, 27-29 March 2000. London: Institution of Engineering and Technology.
Lee, H.S., 2010. Factors Influencing Customer Loyalty of Mobile Phone Service: Empirical Evidence from Koreans. Journal of Internet Banking and Commerce, 15(2), [online] Available at: < http://www.arraydev.com/commerce/jibc/ > [Accessed 01 August 2016].
Lee, W., 1976. Mobile Communications Engineering. New York: McGraw-Hill.
Levin, H.J., 1971. The Invisible Resource: Use and Regulation of the Radio Spectrum. Baltimore: John Hopkins Press.
Malik, O., 2012. Monthly Traffic volumes in 3G by type of equipment. [online] Available at: < http://gigaom.com/broadband/smartphones-ipads-the-state-of-the-mobile-internet/ > [Accessed 05 February 2016].
Paetsch, M., 1993. Mobile Communications in the U.S. and Europe: Regulation, Technology and Markets. Boston: Artech House Mobile Communications.
Pelkmans, J., 2001. The GSM standard: explaining a success story. Journal of European Public Policy, [e-journal] 8(3), pp.432 - 453. http://dx.doi.org/10.1080/13501760110056059.
Portilla-Fugueras, A., Salcedo-Sanz, S., Hackbarth, K.D., López-Ferreras, F. and Esteve-Asensio, G., 2009. Novel Heuristics for Cell Radius Determination in WCDMA Systems and Their Application to Strategic Planning Studies. EURASIP Journal on Wireless Communications and Networking, 2009(314814), pp.1-14.
Rodini, M, Ward, M.R. and Woroch, G.A., 2003. Going mobile: substitutability between fixed and mobile access. Compeitition in Wireless: Spectrum, Service and Technology Wars. Telecommunication Policy, 27(5-6), pp.457-476.
Seybold, J. S., 2005. Frontmatter: Introduction to RF Propagation. Hoboken, NJ: John Wiley & Sons.
Sharma, C., 2012a. Data Revenues in bn $ as of Q4/1. [online] Available at: < http://www.chetansharma.com/MobilePatentsLandscape.htm > [Accessed 05 February 2016].
Sharma, C., 2012b. Development of Desktop/Laptop shipements (blue line) vs. smartphones/tablets (red line) 2009 to 2014. [online] Available at: < http://www.chetansharma.com/MobilePatentsLandscape.htm > [Accessed 05 February 2016].
Sharma, C., 2012c. US Mobile Data Growth 2006-2011. [online] Available at: < http://www.chetansharma.com/MobilePatentsLandscape.htm > [Accessed 05 February 2016].
Statista, 2017a. Global voice service revenues from 2010 to 2015 (in billion U.S. dollars). [online] Available at: < https://www.statista.com/statistics/218607/global-mobile-voice-service-revenues-since-2010/ > [Accessed 10 February 2017].
Statista, 2017b. Mobile data service revenues worldwide from 2010 to 2015 (in billion U.S. dollars). [online] Available at: < https://www.statista.com/statistics/218609/global-mobile-data-service-revenues-since-2010/ > [Accessed 10 February 2017].
Steinbock, D., 2005. The Mobile Revolution - The making of mobile services worldwide. London: Kogan Page.
Vogelsang, I., 2010. The relationship between mobile and fixed-line communications: A survey. Wireless Technologies: Information Economics and Policy, 22(1), pp.4-17.
White Paper, 2011. TD-LTE: Exciting Alternative, Global Momentum. [online] Available at: < http://www.tdia.cn/test/en/downloa/20111214.pdf > [Accessed 10 February 2016].
Wireless Intelligence, 2012. From 2001 to 2010, mobile calls increased 10 times. [online] Available at: < http://gigaom.com/2011/09/01/from-2001-to-2010-mobile-calls-zoomed-10-times/ > [Accessed 02 February 2016].
Yaipairoj, S. and Harmantzis, F.C., 2004. Dynamic pricing with “alternatives” for mobile networks. In: IEEE, Wireless Communications and Networking Conference. Atlanta, Georgia, USA, 21-25 March. IEEE.
Zhao, L., Lu, Y., Zhang, L. and Chau, P., 2012. Assessing the effects of service quality and justice on customer satisfaction and the continuance intention of mobile value-added services: An empirical test of a multidimensional model. Decision Support Systems, 52(3), p.645-656.
Zheng, L., Joe-Wong, C., Tan, C.W., Ha, S. and Chiangs, M., 2015. Secondary markets for mobile data: Feasibility and benefits of traded data plans. In: IEEE, IEEE Conference on Computer Communications (INFOCOM). Kowloon, Hong-Kong, 26 April-01 May 2015. IEEE.
Authors
This is an open access journal which means that all content is freely available without charge to the user or his/her institution. Users are allowed to read, download, copy, distribute, print, search, or link to the full texts of the articles in this journal without asking prior permission from the publisher or the author. This is in accordance with the BOAI definition of open access. This journal is licensed under a Creative Commons Attribution 4.0 License - http://creativecommons.org/licenses/by/4.0.
Authors who publish with the Quality Innovation Prosperity agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work.