Dynamic pricing in cellular networks, a mobility model with a provider-oriented approach

The success of i-mode in Japan and the slow but, nevertheless, steady uptake of WAP in the UK and elsewhere indicate a healthy growth in demand for mobile data services. This rapid growth in coupled to the limited bandwidth to the air interface, has encouraged researchers to find technological solutions to increase the number of usable suggested remedies invariably involve installation of new infrastructure. While such strategies enable the networks to meet peak-hour demand, they inevitably leave resources idle in off-peak hours. In this context dynamic pricing could potentially offer a "soft edge" scheme for encouraging a more efficient use of available resources. This article reports on studies carried out so far that attempt to predict GSM, GPRS and UMTS network-utilisation behaviour under a dynamic pricing regime. A mathematical model is developed to predict the expected reaction of users to changes in price, taking into account variations due to the time of day and user mobility as well as substitution effects due to the use of the fixed network. Simulation results indicate a strong correlation between the number of calls generated and dropped, and the shape of the price function. These suggest that dynamic pricing could be used effectively to regulate demand, whilst offering a sensible means for the optimisation of network utilisation, and hence revenue.