Pricing by Timing: Innovating Broadband Data Plans

Wireless Internet data usage is doubling every year. Users are consuming more of high-bandwidth data applications, with usage concentrated on several peak hours in a day. The authors review many of the pricing schemes in practice today and analyze why they do not solve this problem of growing data traffic. They propose a time-dependent pricing scheme as a viable solution, charging different prices for Internet access at different times. This pricing induces users to spread out their bandwidth consumption across different times of the day, with a large potential impact on ISP (Internet Service Provider) revenue, congestion management, and consumer behavior.