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4th New York Metro Area Networking Workshop 2004 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 9/10/2004 www.stevens.edu/perfectnet 1 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 Pricing model of GPRS integrated with Wi-Fi 9/10/2004 Tight coupling Loose coupling Demand functions Revenue from integrated and non-integrated networks Price setting for Wi-Fi connection fee Numerical results Conclusion www.stevens.edu/perfectnet 2 4th New York Metro Area Networking Workshop 2004 GPRS vs Wi-Fi For certain wireless services, technologies being used for different applications can now be seen as alternative solutions. GPRS offers: Wi-Fi offers: 9/10/2004 wide service coverage Costly and limited transmission rate 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. www.stevens.edu/perfectnet 3 4th New York Metro Area Networking Workshop 2004 Deployment of Wi-Fi Networks Home and businesses Micro carriers 9/10/2004 The service is offered without charge. The possibility of users open up their access points for public=>requires sophisticated pricing scheme. Starbucks, Border bookstores The carriers set up their own access points and maintain customer and billing relationship with subscribers www.stevens.edu/perfectnet 4 4th New York Metro Area Networking Workshop 2004 Deployment of Wi-Fi Networks Wi-Fi startups Wi-Fi services offered by cellular operators 9/10/2004 Boingo, Wayport The operators aggregate the networks provided by micro carriers and provide single access to the end users. The operator partner with the micro-carriers or aggregators or they can roll out their own WiFi networks. The operator can offer services comparable to 3G www.stevens.edu/perfectnet 5 4th New York Metro Area Networking Workshop 2004 Architecture of GPRS integrated with Wi-Fi networks: Tight coupling HLR MS GPRS RAN External Packet Data Network SGSN GPRS Core GGSN SGSN WLAN 9/10/2004 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 www.stevens.edu/perfectnet 6 4th New York Metro Area Networking Workshop 2004 Architecture of GPRS integrated with Wi-Fi networks: Loose Coupling WLAN HLR MS GPRS RAN SGSN GPRS Core 9/10/2004 GGSN SGSN External Packet Data Network 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. www.stevens.edu/perfectnet 7 4th New York Metro Area Networking Workshop 2004 Pricing model for GPRS with Wi-Fi integration 9/10/2004 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. www.stevens.edu/perfectnet 8 4th New York Metro Area Networking Workshop 2004 Pricing model for GPRS with Wi-Fi integration (cont.) 9/10/2004 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 www.stevens.edu/perfectnet 9 4th New York Metro Area Networking Workshop 2004 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] De 9/10/2004 [ pg pw 1]2 0 D 1 p g pw (1) 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 www.stevens.edu/perfectnet 10 4th New York Metro Area Networking Workshop 2004 Demand function (cont.) p g rg v p w rw (2) rg = charging rate per MB for GPRS network rw = connection fee for Wi-Fi hotspots v = session volume in MB 9/10/2004 www.stevens.edu/perfectnet 11 4th New York Metro Area Networking Workshop 2004 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. Rint D (rg v) (1 D) rw (3) Rint=Average revenue of GPRS integrated with Wi-Fi ($/user/connection) 9/10/2004 www.stevens.edu/perfectnet 12 4th New York Metro Area Networking Workshop 2004 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 nonintegrated GPRS network would be higher than that with integration. Dw.o.int 1 ( 1 pg K 1) 4 (4) K is a constant Average revenue of non-integrated GPRS => 9/10/2004 Rw.o. int Dw.o. int (rg v) www.stevens.edu/perfectnet 13 (5) 4th New York Metro Area Networking Workshop 2004 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 rw 9/10/2004 rg v 1 ln D (6) 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. www.stevens.edu/perfectnet 14 4th New York Metro Area Networking Workshop 2004 Numerical results Assumptions 9/10/2004 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 www.stevens.edu/perfectnet 15 4th New York Metro Area Networking Workshop 2004 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. 9/10/2004 www.stevens.edu/perfectnet 16 4th New York Metro Area Networking Workshop 2004 Numerical results (cont.) More revenue but less traffic migration We could think of Wi-Fi connection fee that yields the largest difference between these two revenue curves More traffic migration but less revenue 9/10/2004 www.stevens.edu/perfectnet Largest difference in revenue 17 4th New York Metro Area Networking Workshop 2004 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. 9/10/2004 Less sensitive to the change in price More sensitive to the change in price www.stevens.edu/perfectnet 18 4th New York Metro Area Networking Workshop 2004 Conclusions 9/10/2004 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. www.stevens.edu/perfectnet 19 4th New York Metro Area Networking Workshop 2004 Future Works 9/10/2004 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. www.stevens.edu/perfectnet 20 4th New York Metro Area Networking Workshop 2004 Thank you Saravut Yaipairoj (Speaker) Dr. Fotios C. Harmantzis Vinoth Gunasekaran PerfEcNet Research Group Telecommunications Management Stevens Institute of Technology Hoboken, NJ USA [email protected] 9/10/2004 www.stevens.edu/perfectnet 21