Simulation analysis of QoS enabled Internet pricing strategies: flat rate vs. two-part tariff

In this paper, we study the influence of QoS pricing strategy in the future QoS Internet market. We create a Bertrand duopoly game model with different pricing schemes: one ISP with flat rate pricing for its QoS service and the other ISP with two part tariff, a combined pricing scheme with flat rate and usage-sensitive pricing. Based on industry survey data, we conduct a simulation of a random number generation method for consumer demand and Internet access hours. Then, we find an equilibrium point of pricing strategy where an ISP with flat rate pricing has higher profit than an ISP with a two-part tariff. Finally, we present an analytical framework for the future QoS Internet pricing strategy.