Start Date
12-16-2013
Description
The unprecedented growth of cellular traffic driven by web surfing, video streaming, and cloud-based services is creating challenges for cellular service providers to fulfill the unmet demand. To minimize congestion costs for under-served demand (e.g., dissatisfied customers, or churn), the service provider is willing to pay WiFi hotspots to serve the demand that exceeds capacity. This paper proposes an optimal procurement mechanism with contingent contracts for service providers to leverage the advantages of both cellular and WiFi resources. Compared to conventional cellular communication technologies, WiFi hotspots provide data rates with a more limited coverage. Our present work contributes to the existing literature by developing an analytical model, which considers this unique challenge of integrating the longer range cellular resource and shorter range WiFi hotspots. The simulation results show that the proposed procurement mechanism significantly outperforms the standard Vickrey-Clarke-Groves (VCG) auction in terms of the service provider's expected payoff.
Recommended Citation
Qiu, Liangfei; Rui, Huaxia; and Whinston, Andrew, "Hotspot Economics: Procurement of Third-Party WiFi Capacity for Mobile Data Offloading" (2013). ICIS 2013 Proceedings. 5.
https://aisel.aisnet.org/icis2013/proceedings/EconomicsOfIS/5
Hotspot Economics: Procurement of Third-Party WiFi Capacity for Mobile Data Offloading
The unprecedented growth of cellular traffic driven by web surfing, video streaming, and cloud-based services is creating challenges for cellular service providers to fulfill the unmet demand. To minimize congestion costs for under-served demand (e.g., dissatisfied customers, or churn), the service provider is willing to pay WiFi hotspots to serve the demand that exceeds capacity. This paper proposes an optimal procurement mechanism with contingent contracts for service providers to leverage the advantages of both cellular and WiFi resources. Compared to conventional cellular communication technologies, WiFi hotspots provide data rates with a more limited coverage. Our present work contributes to the existing literature by developing an analytical model, which considers this unique challenge of integrating the longer range cellular resource and shorter range WiFi hotspots. The simulation results show that the proposed procurement mechanism significantly outperforms the standard Vickrey-Clarke-Groves (VCG) auction in terms of the service provider's expected payoff.