Incentive Design and Market Evolution of Mobile User-Provided Networks (1502.06327v2)

Abstract: An operator-assisted user-provided network (UPN) has the potential to achieve a low cost ubiquitous Internet connectivity, without significantly increasing the network infrastructure investment. In this paper, we consider such a network where the network operator encourages some of her subscribers to operate as mobile Wi-Fi hotspots (hosts), providing Internet connectivity for other subscribers (clients). We formulate the interaction between the operator and mobile users as a two-stage game. In Stage I, the operator determines the usage-based pricing and quota-based incentive mechanism for the data usage. In Stage II, the mobile users make their decisions about whether to be a host, or a client, or not a subscriber at all. We characterize how the users' membership choices will affect each other's payoffs in Stage II, and how the operator optimizes her decision in Stage I to maximize her profit. Our theoretical and numerical results show that the operator's maximum profit increases with the user density under the proposed hybrid pricing mechanism, and the profit gain can be up to 50\% in a dense network comparing with a pricing-only approach with no incentives.