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Usage-based plans
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从本节课中
Pricing Data
Data makes up a significant part of our cell phone bills. How do cellular providers set these price points? In this lesson, we will see how so-called usage-based pricing schemes can send better signals than flat- rate, “buffet” schemes, leading to better sharing of the network.
教学方
Christopher Brinton
Lecturer
Mung Chiang
Professor
So, now what do usage-based plans actually look like.
When you go to your internet service provider and you sign up for a plan.
What are you actually going to be signing up for.
Here's a set of Verizon wireless data plans as of Spring 2012.
And it just shows a couple of the typical characteristics.
The first is that it's not proportional for the entire increase on GB.
For instance, if you were down here initially you were doing $30 up until
about 2GB, and then after that you're paying you $10 per GB increase right.
So when you get up to 4GB you're paying an extra $20 on top of that so you're up
to $50, and so on. And it keeps going up.
And then you might be able to pay a little extra, if you want to pay extra
flat rate like $50 right. And you could consume all the way up to
5GB without having to actually pay any extra so.
If you're between four and five, it'll actually be cheaper for you to use this
extra data plan then if you're on the $30 a month plan.
And, you know, so, if, if you're a light user, you'll probably sign up for the
lower one where you're paying a lower flat rate.
But if you're a heavier user you'll sign up for more, you're paying a larger flat
rate because after a certain amount the larger ones are always going to be
cheaper than when you have the smaller ones.
And for instance if you're again, if you want to pay $80 you can go all the way up
to 10GB. I don't want to pay any extra and so
you're paying $80 for 10GB and someone else down here is, is paying up a, up a
bit more. when they get up to 10GB because the
slope's already increased if they only wanted to pay $50 as a flat rate.
And so you see a couple characteristics three of them in particular.
First is that the baseline is still a flat-rate, okay.
So the baseline is this region here for this $30 one, this region here for the
$50 one and this region here for this $80 one.
And that's those, these again, these are just plans that you could sign up for
depending on what you think you need. And on the slope is to charge per GB,
right so and above this you're paying $10 for a GB which is in fact, they're all
$10 per GB. And, the overall charge is based on the
total usage, right. So you can just go anywhere over here and
say okay well if I'm going to consume 10GB, per month.
If I'm, confident that I'm going to consume 10GB per month then, on this one
I'm going to have to pay this amount of money.
I could just go right up the graph on this one.
I'm going to pay this amount of money, and on this one I'm going to pay this
amount of money. You can compare and obviously, if you
knew you were going to pay, consume 10GB per month, you'd want to chose the
highest flat rate initially, it would be the lowest total cost.
And, another interesting thing or another important thing to notice, that these are
time independent. What that means is that, it doesn't
depend when in the month you consume them, right, you could use them all in
the last day. Or you could use all your 10 GB in last
day and you'll still probably pay the same amount as if you used the same
amount everyday for the entire month. And there's other forms of smarter
pricing that would actually take into account what time of day you're using it.
And even what day of the month you're using it in certain instances.
But we're not looking at that here. And so, this is obviously this is a
radical change right? Especially to people who are used to
unlimited data plans. It's a radical change for consumers.
And even for the entire industry, right? Because now it's even less, maybe hard
for app developers to push out their app, because people don't want to pay the
extra data associated with them for instance and
So it really changes a lot of the ecosystem in this for, for every one.
for customers, for providers, for app developers, for even cell phone
manufacturers, smart phone manufacturers, and so on.
But, as you see that there's several strong reasons in favor of using
usage-based pricing even for consumers. And a lot of those stem back to what we
talked about before about having a more efficient pricing signal.
So, let's look at alternative usage-based pricing that are trying to also tackle
the problem of congestion. Which is really the theme here, is we
want to tackle the problem of mobile congestion and data congestion.
So, one option would be to increase the flat rate for everyone, as we saw you
know, if we increase the flat rate from $30 per month to $40 per month.
Then the ISP might be able to deal with that extra congestion on the network.
If everyone else is going to pay more, but that certainly wouldn't be fair to
people who aren't consuming a lot at all. As we said, if they had to keep paying a
higher and higher amount. Just like at a buffet, If a buffet kept
charging more and more, it wouldn't be fair to the people who were just going in
there to just eat very little. And so it would get much, much less fair
in a sense. Another way would be to cap heavy users'
traffic. Alright, so that's actually a a specific
form or a very special case of usage-based pricing as you'll see in this
graph over here. And the idea here is a throttle, right.
So, basically once they get above a certain amount here, whatever this amount
is, right? initially it would be flat rate.
And we're going to say okay, well, you're paying this much per month, however much
this may be, and maybe it's $40, and then, but once you get it above this
amount, I'm not going to let you use anymore data.
And so, you basically hit this wall here, which is basically to say, now the cost
is going to infinity, and no one is going to pay that, so you can't use any more
data. It's not possible to get further, because
they're throttling your usage. They're basically saying, no, you can't
use the network anymore. You've already gone [UNKNOWN] your
monthly limit. There's another alternative which is to
implement smarter versions of pricing, which are those schemes like Time
Dependent Pricing, or TDP. Where, as we said before, usage-based
pricing is time-independent. Right?
So it's not depending on what time of day you're consuming.
But we can actually take that into account and during congestion periods, we
could say. Alright, well it's going to cost much
more to consume right now than if you waited a couple hours until when it
wasn't congested or it wasn't as much congested.
and along those lines, as well, Congestion Dependent Pricing is just kind
of Time Dependent Pricing at finer time scales.
This is beyond our scope here, but just know that there are smarter versions of
pricing that take time, a time factor into account.
And most have started pursuing usage-based pricing, though.
So these flat-rate and capping even, capping does occur sometimes but flat
rate really is kind of going out the window now.
smart data pricing is definitely on the rise today.
And, we have a large research component of our lab at Princeton dealing with
smart data pricing, as a matter of fact. But, really today, a lot of the pursuit
is for usage-based pricing.
