Secondary markets for mobile data: Feasibility and benefits of traded data plans

Abstract

The growing volume of mobile data traffic has led many Internet service providers (ISPs) to cap their users' monthly data usage, with overage fees for exceeding their caps. In this work, we examine a secondary data market in which users can buy and sell leftover data caps from each other. China Mobile Hong Kong recently introduced such a market. While similar to an auction in that users submit bids to buy and sell data, it differs from traditional double auctions in that the ISP serves as the middleman between buyers and sellers. We derive the optimal prices and amount of data that different buyers and sellers are willing to bid in this market and then propose an algorithm for ISPs to match buyers and sellers. We compare the optimal matching for different ISP objectives and derive conditions under which an ISP can obtain higher revenue with the secondary market: while the ISP loses revenue from overage fees, it can assess administration fees and take the differences between the buyer and seller prices. Finally, we use one year of usage data from 100 U.S. mobile users to illustrate that the conditions for a revenue increase can hold in practice.