Sponsored data with ISP competition

We analyze the effect of sponsored data platforms when Internet service providers (ISPs) compete for subscribers and content providers (CPs) compete for a share of the bandwidth usage by the customers. Our analytical model is of a full information, leader-follower game. ISPs lead and set prices for sponsorship. CPs then make the binary decision of sponsoring or not sponsoring their content on the ISPs. Lastly, based on both of these, users make a two-part decision of choosing the ISP to which they subscribe, and the amount of data to consume from each of the CPs through the chosen ISP. User consumption is determined by a utility maximization framework, the sponsorship decision is determined by a non-cooperative game between the CPs, and the ISPs set their prices to maximize their profit in response to the prices set by the competing ISP. We analyze the pricing dynamics of the prices set by the ISPs, the sponsorship decisions that the CPs make and the market structure therein, and the surpluses of the ISPs, CPs, and users. This is the first analysis of the effect sponsored data platforms in the presence of ISP competition. We show that inter-ISP competition does not inhibit ISPs from extracting a significant fraction of the CP surplus. Moreover, the ISPs often have an incentive to significantly skew the CP marketplace in favor of the most profitable CP

A Non-cooperative Game-Theoretic Framework for Sponsoring Content in the Internet Market

Data traffic demand over the Internet is increasing rapidly, and it is changing the pricing model between internet service providers (ISPs), content providers (CPs) and end users. One recent pricing proposal is sponsored data plan, i.e., when CP negotiates with the ISP on behalf of the users to remove the network subscription fees so as to attract more users and increase the number of advertisements. As such, a key challenge is how to provide proper sponsorship in the situation of complex interactions among the telecommunication actors, namely, the advertisers, the content provider, and users. To answer those questions, we explore the potential economic impacts of this new pricing model by modeling the interplay among the advertiser, users, and the CPs in a game theoretic framework. The CP may have either a subscription revenue model (charging end-users) or an advertisement revenue model (charging advertisers). In this work, we design and analyze the interaction among CPs having an advertisement revenue as a non-cooperative game, where each CP determines the proportion of data to sponsor and a level of credibility of content. In turn, the end-users demand for the content of a CP depends not only on their strategies but also upon those proposed by all of its competitors. Through rigorous mathematical analysis, we prove the existence and uniqueness of the Nash equilibrium. Based on the analysis of the game properties, we propose an iterative algorithm, which guarantees to converge to the Nash equilibrium point in a distributed manner. Numerical investigation shows the convergence of a proposed algorithm to the Nash equilibrium point and corroborates the fact that sponsoring content may improve the CPs outcome