A contract-theoretic design of mobile data plan with time flexibility

Abstract

With the increase of market competition, many Mobile Network Operators (MNOs) are introducing various innovative data mechanisms as complementary to the "traditional" data plan to attract more subscribers and increase profits. The traditional data plan is a three-part tariff, where a subscriber pays the MNO a lump-sum subscription fee for the data usage up to a data cap, and then pays a linear usage-based fee for the data usage over the data cap. Due to the stochastic nature of users' data usage, it is often difficult for a user to decide the best choice of monthly data cap to achieve an optimal balance between the data waste (when the actual data usage is lower than the data cap) and the overage usage (when the actual data usage exceeds the data cap). Therefore, the MNOs are investigating various innovative data mechanisms that can give users more flexibility and attract more subscriptions.