a pricing model of gprs networks with wi-fi integration
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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 PresentationTRANSCRIPT
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
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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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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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
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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
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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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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
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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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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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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
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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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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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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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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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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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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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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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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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Thank you
Saravut Yaipairoj (Speaker)Dr. Fotios C. HarmantzisVinoth GunasekaranPerfEcNet Research GroupTelecommunications ManagementStevens Institute of TechnologyHoboken, NJ [email protected]