Pricing and Revenue Sharing for Secondary Data Market

Abstract: Recent advances in technology enable public or commercial establishments and individual data plan subscribers to operate as Wi-Fi providers, offering Internet access. However, the model of a monthly flat service fee charged by ISP to establishment or individual WFPs offers very little incentives for ISP to provide additional bandwidth to WFPs customers. Thus, these users may experience insufficient bandwidth when there is high demand for bandwidth. In addition, ISP even discourages individual subscribers to provide Internet access through their smartphone because such practices may cause market saturation. To address this, in this paper we propose a dynamic pricing scheme and a revenue sharing mechanism that provide incentives for ISP to support establishment and individual Wi-Fi providers offering Internet access to users. Our revenue sharing model is based on Shapley value mechanism. Importantly, our proposed revenue sharing mechanism captures the power negotiation between ISP and Wi-Fi providers, and how shifts in the power balance between the two entities influence revenue division. Specifically, the model assures that the party who contributes more receives a higher portion of the revenue. In addition to that, the division of revenue eventually converges to a percentage value.