Duopoly Competition for Mobile Data Plans with Time Flexibility

The growing competition drives the mobile network operators (MNOs) to explore adding time flexibility to the traditional data plan, which consists of a monthly subscription fee, a data cap, and a per-unit fee for exceeding the data cap. The rollover data plan, which allows the unused data of the previous month to be used in the current month, provides the subscribers with the time flexibility. In this paper, we formulate two MNOs’ market competition as a three-stage game, where the MNOs decide their data mechanisms (traditional or rollover) in Stage I and the pricing strategies in Stage II, and then users make their subscription decisions in Stage III. Different from the monopoly market where an MNO always prefers the rollover mechanism over the traditional plan in terms of profit, MNOs may adopt different data mechanisms at an equilibrium. Specifically, the high-QoS MNO would gradually abandon the rollover mechanism as its QoS advantage diminishes. Meanwhile, the low-QoS MNO would progressively upgrade to the rollover mechanism. The numerical results show that the market competition significantly limits MNOs’ profits, but both MNOs obtain higher profits with the possible choice of the rollover data plan.