Variety Matters: A New Model for the Wireless Data Market under Sponsored Data Plans

In this paper, we develop a new model to study the competition among Content Providers (CPs) under Sponsored Data Plans (SDPs). SDP is an emerging pricing model for the wireless data market where Internet Service Providers (ISPs) allow a CP to compensate the traffic volume of users when users access the contents of this CP. Studies have shown that SDPs create a triple-win situation, where users consume more contents and the revenue of both CPs and ISPs increases. Currently, a main concern of SDPs is on whether SDPs may bring about unfair competition among CPs. Studies have shown that big CPs have an advantage over small CPs. We observe that such conclusions are derived because in all previous models, traffic price is the only factor that affects user decisions. We argue that it is not precise. Nowadays, people conduct a large variety of activities online, and users have an intrinsic demand for a variety of contents. To reflect this, we for the first time characterize the variety demand as an intrinsic parameter of users, and integrate such variety into a new model to help us drive some novel insights into SDPs, especially the competition among CPs. Our model shows that variety matters for understanding SDPs more thoroughly and comprehensively. For example, under SDPs, the advantage of CPs with higher revenue will be significantly reduced if users have a greater love for variety. Overall, our new model leads to a set of completely new results and rectifies some past conclusions.