Pricing Under Constraints in Access Networks: Revenue Maximization and Congestion Management

Thursday, April 15, 2010 - 11:00am - 12:00pm EDT

  • Location:Jacobs Administrative Building (5th Floor), Silleck Lounge
    Six MetroTech Center, Brooklyn, New York

Speaker: Dr. Prashanth Hande

Faculty Host: Professor Sundeep Rangan

Abstract

Universal availability of broadband and "network neutrality" are two major issues with Broadband. Pricing can be key to resolve the contentious issues. We investigate 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 data-rate 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 data-rate. 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.

About the Speaker

Prashanth Hande has extensive experience in wireless systems engineering across the physical, MAC and networking layers.   He received the M.S. at Cornell and Ph.D. at Princeton, both in Electrical Engineering.  He has worked at Alantro Communications, Flarion Technologies and most recently at Qualcomm, where he is currently a Senior Staff Engineer. In a recent project, he led the development of multi-carrier and Voice over IP features on Flash-OFDM, industry's first OFDMA based mobile WAN system. He is currently involved in a  project to develop chipsets for UMTS and LTE femtocells. His research interests are in resource allocation for service provisioning in access networks, and economics, pricing and policy issues in communication networks.