a pricing model of gprs networks with wi-fi integration

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9/10/2004 1 www.stevens.edu/perfectnet 4th New York Metro Area Networking Workshop 2004 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 [email protected] www.stevens.edu/perfectnet

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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 [email protected] www.stevens.edu/perfectnet. Agenda. - PowerPoint PPT Presentation

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Page 1: A Pricing Model of GPRS Networks with Wi-Fi Integration

9/10/2004 1www.stevens.edu/perfectnet

4th New York Metro Area Networking Workshop 2004

A Pricing Model of GPRS Networks with Wi-Fi IntegrationSaravut Yaipairoj (Speaker)Dr. Fotios C. HarmantzisVinoth GunasekaranPerfEcNet Research GroupTelecommunications ManagementStevens Institute of TechnologyHoboken, NJ [email protected]/perfectnet

Page 2: A Pricing Model of GPRS Networks with Wi-Fi Integration

9/10/2004 2www.stevens.edu/perfectnet

4th New York Metro Area Networking Workshop 2004

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

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4th New York Metro Area Networking Workshop 2004

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.

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4th New York Metro Area Networking Workshop 2004

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

Page 5: A Pricing Model of GPRS Networks with Wi-Fi Integration

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4th New York Metro Area Networking Workshop 2004

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

Page 6: A Pricing Model of GPRS Networks with Wi-Fi Integration

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4th New York Metro Area Networking Workshop 2004

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

MS GPRSRAN

GPRS Core

External Packet DataNetwork

WLAN

SGSNGGSN

HLR

SGSN

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4th New York Metro Area Networking Workshop 2004

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.

MSGPRSRAN

GPRS Core External Packet DataNetwork

WLAN

SGSNGGSN

HLR

SGSN

Page 8: A Pricing Model of GPRS Networks with Wi-Fi Integration

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4th New York Metro Area Networking Workshop 2004

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.

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4th New York Metro Area Networking Workshop 2004

Pricing model for GPRS with Wi-Fi integration (cont.)

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

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4th New York Metro Area Networking Workshop 2004

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

2]1[

w

g

p

p

eD wg pp (1)10 D

Page 11: A Pricing Model of GPRS Networks with Wi-Fi Integration

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4th New York Metro Area Networking Workshop 2004

Demand function (cont.)

vrp gg

ww rp

rg = charging rate per MB for GPRS networkrw = connection fee for Wi-Fi hotspotsv = session volume in MB

(2)

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4th New York Metro Area Networking Workshop 2004

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.

wg rDvrDR )1()(int

Rint=Average revenue of GPRS integrated with Wi-Fi ($/user/connection)

(3)

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4th New York Metro Area Networking Workshop 2004

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.

4int..

)1(1

1

K

pD

gow

K is a constant

)(int..int.. vrDR gowow Average revenue of non-integrated GPRS =>

(4)

(5)

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4th New York Metro Area Networking Workshop 2004

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.

D

vrr gw

ln1

(6)

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4th New York Metro Area Networking Workshop 2004

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

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4th New York Metro Area Networking Workshop 2004

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.

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4th New York Metro Area Networking Workshop 2004

Numerical results (cont.)

More revenue but less traffic migration

More traffic

migration but less revenue

We could think of Wi-Ficonnection fee that yieldsthe largest difference between these two revenuecurves

Largest difference in revenue

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4th New York Metro Area Networking Workshop 2004

Wi-Fi Connection Fee vs Data Volume

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.

Less sensitive to the change

in price

More sensitive to the change

in price

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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.

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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.

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4th New York Metro Area Networking Workshop 2004

Thank you

Saravut Yaipairoj (Speaker)Dr. Fotios C. HarmantzisVinoth GunasekaranPerfEcNet Research GroupTelecommunications ManagementStevens Institute of TechnologyHoboken, NJ [email protected]