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TUBE (Time-Dependent Pricing)

We've implemented an end-to-end system for offering day-ahead time-dependent pricing to broadband users. The basic idea is to offer lower prices in less congested periods, encouraging users to shift some of their traffic from congested to less congested periods, thus relieving the peak load on ISP networks.   Our system computes the optimal prices to offer, given estimates of user reactions to these prices.   ISPs can then monitor the resulting usage pattern over the next day and adapt the next day's prices to any observed changes in user behavior.

TUBE stands for time dependent, usage based, broadband price engineering. The basic idea behind it is simple: charging by when you use the Internet is a viable way to use all the capacity in the expensive wireless spectrum, and use them all the time. TUBE is a software system that computes and delivers the right pricing incentives to users to make that happen.

The Problem

Facilitated by the advent of smartphones and mobile devices, wireless Internet usage is exploding, and the tail of usage is getting heavier, i.e. more users are now consuming larger amounts of data. The heavy tail largely drives the Internet Service Provider's (ISP) cost, but their revenue is based on the median user. Consequently, the ISPs economic model will soon be falling apart as the tail gets heavier and heavier. To make it worse, the heavy usage concentrates on several peak hours in a day, forcing ISPs to overprovision according to that. Even charging by monthly usage overages, as AT&T started doing last year and Verizon Wireless announced this month, will not mitigate that. But nevertheless, usage-based charging at $10/GB is going to hurt many users.

Figure 1: The temporal demand for bandwidth is highly variable with peaks and valleys

Our Solution

As shown in Figure 1, there is a big differential between the peaks and the valleys of bandwidth usage over a day, or even over an hour. We need to exploit this fact in order to overcome the problem. Interestingly, many types of mobile applications traffic are time-elastic. In our recent online survey, 40% say that they're willing to wait 5-10 minutes in streaming YouTube videos if they see 2/3rd cheaper monthly bills. More than half say they can wait for 3-5 hours in downloading a movie that they aren't watching right away. If we were to provide the right price incentives to these users, they will defer their usage from peak hours to lower priced periods, thereby flattening out the demand curve and reducing the ISP's operational cost.

So the solution is to charge users based on when they use bandwidth, in addition to how much they use. In the US, FCC is now encouraging measures to match price to cost. The first step is monthly usage-based charging: $10 for every extra gigabyte today. But such overage charging scheme misses the timescale: ISPs have to overprovision based on peak hour traffic rather than monthly total usage. What ISPs need is a "carrot and stick" solution: users who are willing to wait and avoid the peak congestion times should be rewarded, and those who don't will pay a higher price. We surveyed many ISPs, and they agree that time dependent pricing is the next step: one pays more during peak hours, and saves by waiting. We collaborate with Qualcomm, and they're interested in taking this even one step further: charging by wireless congestion condition.

Say it is 8 pm now, a busy hour, but so happens that very few are using the spectrum for two minutes; why not advertise these "flashy whitespaces" with a very low spot price? Those waiting only for these very low prices become a new class of users- the ultra-affordable data plan (UAP) users.

Figure 2: Overview of the TUBE system

Applications of the Technology

  • Enables pricing innovation by ISPs to meet the growing user demand while reducing their peak band- width consumption, while at the same time offering flexibility of bandwidth consumption timing to the end users.
  • TUBE allows ISPs to cut back on the capacity and cost needed to haul back the mobile traffic from rural areas and poor neighborhoods as it incentivizes heavy users to shift their time insensitive traffic from peak hours to off-peak hours. This reduces the pipe size needed to build the access infrastructure and makes it possible for operators to reach out to rural areas of even low population density (potential to use satellite links in off-peak hours to serve rural areas).
  • Allows ISPs to tap into a larger user base by providing a way to offer ultra-affordable wireless data plans whose users would pay a low flat fee in exchange for using an ISPs wireless network only at times when congestion condition is very mild. This is what we call as the UAP- ultra affordable data plan. The key idea is that even in congested locations and heavily used spectrum, quite often there are periods of time, known as "flashy whitespaces," during which there is little usage. TUBE leverages these whitespaces in the wireless channels to support the UAP data users who will have to pay almost nothing for data access.
  • TUBE provides an efficient tool for corporate budgeting tool that helps to save on their wireless bills through TDP.