Multi-Dimensional Contract Design for Mobile Data Plan with Time Flexibility

Mobile network operators (MNOs) have been offering mobile data plans with different data caps and subscription fees as an effective way of achieving price discrimination and improving revenue. Recently, some MNOs are investigating innovative data plans with time flexibility based on the multi-cap scheme. The rollover data plan and the credit data plan are such innovative data plans with time flexibility. In this paper, we study how the MNO optimizes its multi-cap data plan with time flexibility in the realistic asymmetric information scenario, where each user is associated with multidimensional private information, i.e., the data valuation and the network substitutability. Specifically, we consider a multi-dimensional contract-theoretic approach, and analyze the optimal data caps and the subscription fees design systematically. We find that each user's willingness-to-pay for a particular data cap can be captured by the slope of his indifference curve on the contract plane, and the feasible contract (satisfying the incentive compatibility and individual rationality conditions) will allocate larger data caps for users with higher willingness-to-pay. Furthermore, we conduct a market survey to estimate the statistical distribution of users' private information, and examine the performance of our proposed multi-dimensional contract design using the empirical data. Numerical results further reveal that the optimal contract may provide price discounts (i.e., negative subscription fees) to attract low valuation users to select a small-cap (possibly zero-cap) contract item. A data mechanism with better time flexibility brings users higher payoffs and the MNO more profit, hence increases the social welfare.