An Incentive Framework for Mobile Data Offloading Market Under Price Competition

Mobile data offloading can help the mobile network operator (MNO) cope with the explosive growth of cellular traffic, by delivering mobile traffic through third-party access points. However, the access point owners (APOs) would need proper incentives to participate in data offloading. In this paper, we consider a data offloading market that includes both price-taking and price-setting APOs. We formulate the interactions among the MNO and these two types of APOs as a three-stage Stackelberg game, and study the MNO's profit maximization problem. Due to a non-convex strategy space, it is in general a non-convex game. Nevertheless, we transform the strategy space into a convex set and prove that a unique subgame perfect equilibrium exists. We further propose iterative algorithms for the MNO and price-setting APOs to obtain the equilibrium. Employing the proposed algorithms, the APOs do not need to obtain full information about the MNO and other APOs. Through numerical studies, we show that the MNO's profit can increase up to three times comparing with the no-offloading case. Furthermore, our proposed incentive mechanism outperforms an existing algorithm by 18 percent in terms of the MNO's profit. Results further show that price competition among price-setting APOs drives the equilibrium market prices down.