Collaborative Consumption for Mobile Broadband: A Quantitative Study

Abstract

Mobile broadband is predominantly priced following tiered plans that involve a certain prepaid commit volume and additional metered volume priced at a higher penalty rate. An individual's demand, however, may vary wildly from month to month and thus users inevitably purchase packages that are either too small or too large for their needs. By collaborating in predefined closed (eg, family) or open groups (eg, through tethering) users can reduce both the amount of paid-but-left-unused capacity or the high penalty rates. In this paper we present a quantitative study of collaborative consumption using data from 40K mobile subscribers and tariffs from ten operators around the world. We show that small 2-person family plans offer modest expected savings in the range of 3\% to 14\%, whereas getting more substantial savings requires rather impractically large groups of approximately 10 people or more. Going over to open groups, where users can freely trade their data capacity, we characterize the impact of the secondary market price on the user costs and the operator revenues, and show that Telcos might be better off to embrace secondary markets (eg, let them integrate with billing), and thus have some control on, as opposed to letting them operate unsupervised through tethering. The latter may severely harm the revenues of a Telco, in an uncontrolled manner, especially in densely populated areas.