Optimal pricing strategies for capacity leasing based on time and volume usage in telecommunication networks

In this study, we use a monopoly pricing model to examine the optimal pricing strategies for “pay-per-time”, “pay-per-volume” and “pay-per both time and volume” based leasing of data networks. Traditionally, network capacity distribution includes short/long term bandwidth and/or usage time leasing. Each consumer has a choice to select volume based, connection-time based or both volume and connection-time based pricing. When customers choose connection-time based pricing, their optimal behavior would be utilizing the bandwidth capacity fully, which can cause network to burst. Also, offering the pay-per-volume scheme to the consumer provides the advantage of leasing the excess capacity to other potential customers serving as network providers. However, volume-based strategies are decreasing the consumers’ interest and usage, because the optimal behaviors of the customers who choose the pay-per-volume pricing scheme generally encourages them to send only enough bytes for time-fixed tasks (for real time applications), causing quality of the task to decrease, which in turn creating an opportunity cost. Choosing pay-per time and volume hybridized pricing scheme allows customers to take advantages of both pricing strategies while decreasing (minimizing) the disadvantages of each, because consumers generally have both time-fixed and size-fixed task such as batch data transactions. However, such a complex pricing policy may confuse and frighten consumers. Therefore, in this study we examined the following two issues: (i) what (if any) are the benefits to the network provider of providing the time and volume hybridized pricing scheme? and (ii) would this offering schema make an impact on the market size? The main contribution of this study is to show that pay-per both time and volume pricing is a viable and often preferable alternative to the only time and/or only volume-based offerings for a large number of customers, and that judicious use of such pricing policy is profitable to the network provider

Rational Regulatory Policy for the Digital Economy: Theory and EU Policy Options

Telecommunications is a key element of the ICT sector which has been shaped by strong innovation dynamics since the 1990s. Market dynamics in selected OECD telecommunications markets are analyzed. We present new ideas about efficient regulation, emphasizing the need to adopt a broader international perspective. Analytical innovations also include the discussion of an adequately-modified Hitch-Sweezy oligopoly model. Moreover, we suggest differentiated two-part tariffs as an ideal welfare-maximizing approach in both wholesale and end-product markets. From a theoretical point-of-view, the need to avoid regulatory uncertainty is also emphasized. Theoretical progress is contrasted with regulations in the EU and the US. The EU offers a broad range of different regulatory approaches where the link between framework regulation and national regulation is rather complex. The internationalization of telecommunications requires a broader cooperation among regulators in the OECD.Digital Economy, Regulatory Policy, European Union

Strategic Interaction Under Asymmetric Regulation: the 'Kiwi Share' in New Zealand Telecommunications

Regulation binds incumbent firms to a different set of obligations from their entrant-competitors thereby creating an asymmetric set of options from which the firms may select the strategies under which they will interact. Whilst most regulatory obligations are specified in law some take the form of contractual agreements. New Zealand's 'Kiwi Share' obligations bind the incumbent to a set of retail tariff structures and levels that have both restricted the incumbent's choices and opened up a range of new strategic opportunities for its rivals that have had a significant effect upon the development of the New Zealand industry. This paper examines the specific consequences of the asymmetric tariff obligations and ensuing strategic interaction amongst sector participants on sector development - namely the effect of universal service retail prices and the allocation of the ensuing costs on the sector's ongoing regulatory agenda; the role of a 'free local calling' obligation on the evolution of New Zealand's broadband market; and the consequent application of further asymmetric legislative obligations on the incumbent to address apparent "problems" for which the asymmetric tariffs and rivals' strategic choices provide more credible explanations than the incumbent's exertion of its dominant position

Harmful Freedom of Choice: Lessons from the Cellphone Market

This article focuses on the relationship between provider and customer, specifically on the complexity of available contracts in the cellphone market and the ways this complexity might be harmful to consumers. This article aims to elucidate the issues, fleshing them out both as a general phenomenon and as a specific implementation in the cellphone context. The aim is not to provide ultimate solutions, but to show the directions these solutions might take and the difficulties involved

Music in electronic markets: an empirical study

Music plays an important, and sometimes overlooked part in the transformation of communication and distribution channels. With a global market volume exceeding US$40 billion, music is not only one of the primary entertainment goods in its own right. Since music is easily personalized and transmitted, it also permeates many other services across cultural borders, anticipating social and economic trends. This article presents one of the first detailed empirical studies on the impact of internet technologies on a specific industry. Drawing on more than 100 interviews conducted between 1996 and 2000 with multinational and independent music companies in 10 markets, strategies of the major players, current business models, future scenarios and regulatory responses to the online distribution of music files are identified and evaluated. The data suggest that changes in the music industry will indeed be far-reaching, but disintermediation is not the likely outcome

The Economics of Infrastructure Investment: Beyond Simple Cost Benefit Analysis

This non-technical ‘think-piece’ examines aspects of infrastructure project evaluation, concentrating on circumstances that may render a standard cost benefit analysis (CBA) inappropriate. It is designed to make infrastructure investors and planners think deeply about their assumptions and to broaden the range of issues that are taken into account. Issues considered include: the role of CBA; network effects (increasing returns to scale) and the endogeneity of resources within an economy; the valuation of productive versus consumptive benefits; the value of traded versus non-traded sector production; the role and choice of the discount rate; and the importance of considering option values when making infrastructure investment and disinvestment decisions.Infrastructure, Cost Benefit Analysis, Evaluation

Legal and Economic Approach to Tying and Other Potentially Unfair and Anticompetitive Commercial Practices: Focus on Financial Services

2This paper analyses the economic and legal aspects related to practices such as tying, bundling and other potentially unfair commercial practices widely used in the financial services industry. Authors draw special attention to the European financial services market. Their law and economics approach aims at illustrating the rationales for applying both antitrust and consumer protection legislation to the practices subject to analysis in this paper and observed in the retail financial services market. The author explores the main findings of the legal and economic theory as regards the applicability of antitrust rules to the practices at hand, and the possibility to treat new commercial practices under antitrust law. The paper then illustrates the economics of tying, bundling and other unfair commercial practices from a consumer policy perspective, and reports some empirical data on switching costs and patterns of consumer behaviour in retail financial services and in other sectors of the economy. Cognitive biases that may cause irrational behaviours in judgement and decision-making processes of a retail consumer are widely assessed. Finally, the author proposes a new multi-stage test for the joint assessment of selling practices under competition and consumer policy.openopenAndrea Renda; Diego ValianteRenda, Andrea; Diego, Valiant

Regulación y estrategias para la transformación digital eficiencia en la expansión de redes y en la provisión de bienes y servicios digitales

Tesis de la Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, leída el 06/11/2017The digital transformation taking place in the last decades is a revolution with a deep economic, social, and cultural impact. It has created enormous opportunities and also new risks. Growth, enhanced productivity, increased citizenship engagement, better democracy and social inclusion are some of the opportunities but at the same time these transformations are challenging human and consumer rights, social policies and economic efficiency. Reaching the huge potential benefits of the digital revolution requires economic analysis to guide new regulations and policies accompanying technological advancement. This thesis proposes regulations and strategies for an optimal provision of digital networks, goods and services contributing to some of the topics of focus in recent literature on digital economy. One problem is entry barriers to companies selling internet access. We contribute to the literature by analyzing one of the causes of the existence of entry barriers, the problem of how efficiently allocate the radio-spectrum. Another problem is the optimal prices to remunerate network providers, digital service providers, consumers and vendors. We contribute by examining the impact of price discrimination of internet content providers under duopolistic competition and multi-dimensional product differentiation in retail broadband access in chapter 3. Chapter 1 offers some proposals for the evaluation of the efficient allocation of spectrum to radio communication services. New approaches to spectrum management have resulted in a more efficient production of services. However, the role of the public sector is still essential in spectrum allocation. This chapter provides a methodology to measure the net benefit of the reallocation of a spectrum band intended to guide regulators and policy makers. We have identified the following facts...La transformación digital que está teniendo lugar en las últimas décadas es una revolución con un profundo impacto económico, social y cultural que ha creado enormes oportunidades y también nuevos retos. Algunas de las oportunidades son un mayor crecimiento económico, mejoras de la productividad, mayor participación ciudadana y una mayor inclusión social, pero al mismo tiempo estas transformaciones desafían los derechos de los ciudadanos y de los consumidores, las políticas sociales y la eficiencia económica. Para alcanzar el enorme potencial de la revolución digital es necesario que el análisis económico guie la regulación y las políticas que acompañan al desarrollo tecnológico. Esta tesis propone nuevas normas y estrategias para una óptima provisión de redes, bienes y servicios digitales, contribuyendo en algunos de los temas de interés de la literatura reciente sobre economía digital. Un problema es la existencia de barreras a la entrada en el mercado de provisión de servicios de acceso a internet. Contribuimos a la literatura existente sobre este asunto, analizando en los capítulos 1 y 2, una de las causas de la existencia dichas barreras, la atribución ineficiente del espectro radioeléctrico. Otro problema es la formación de precios socialmente óptima para remunerar a los proveedores de acceso a internet, los proveedores de servicios digitales, los usuarios y los vendedores de publicidad. Contribuimos a esta materia examinando en el capítulo 3 el impacto de la discriminación de precios sobre proveedores de contenidos cuando en el mercado minorista de acceso a internet existe competencia imperfecta, duopolio, y diferenciación multidimensional de producto. El capítulo 1 ofrece propuestas para la evaluación de la eficiencia de una atribución de espectro a un servicio de radiocomunicaciones. Las nuevas técnicas de gestión del espectro han dado lugar a una provisión más eficiente de los servicios. Sin embargo, el papel del sector público sigue siendo necesario en la gestión del espectro. Este capítulo ofrece una metodología para medir el beneficio neto de una re-atribución de una banda de frecuencias para guiar a reguladores y diseñadores de políticas públicas. Se han obtenido los siguientes resultados destacables...Fac. de Ciencias Económicas y EmpresarialesTRUEunpu

Optimal interconnection and renewable targets in North-West Europe. ESRI WP417, December 2011

This paper makes the case that modern telecommunications markets present particular challenges for competition and consumer protection policy. The analysis initially identifies four specific properties, of which rapid technological change is just one, which in combination are unique to telecommunications. The result is that consumers face an environment that is likely to foment known decision-making biases identified by behavioural economics. This insight is employed to address two issues of concern to policymakers: the generally low levels of switching between providers and the apparent failure to select optimum tariffs. Evidence suggests considerable scope for consumer detriment in both cases. Various policy implications are discussed, including the need for targeted research to more accurately assess the extent of detriment and to increase understanding of the causes of consumer behaviour

Optimizing the Asset and Liability Management of Telecommunication Company using Goal Programming Model

Since the telecommunications companies experience great competition, high churn rate, data traffic issues during the Covid-19 pandemic and the upgrade to 5G connectivity, the finance management of a telecommunications company should be analyzed to study the volatility and returns in the sector. This paper aims to develop a goal programming model to examine the asset and liability management of a telecommunication company, namely Telekom Malaysia Berhad (TM) in Malaysia. The result of this study shows that TM has achieved all the goals in maximizing assets, equities, profits, earnings and optimum management item while minimizing liabilities over the period of study from 2015 to 2019. Potential improvements on these goals have also been identified through this study. This paper has also contributed to the studies in financial management since past studies have not been done on asset and liability management in telecommunications companies which is rapidly growing and expanding even while the world is suffering from economy crisis during this pandemic