Modeling the price reduction effect in mobile telecommunications traffic

As needs for telecommunications services diversify, an increasingly wide range of services is becoming available in the market. Service price reduction is one strategy used by service providers to retain existing subscribers. A price reduction for one service, however, can affect the individual-level usage for other services. Price reductions can also be imposed on a service provider by regulation. For these reasons, understanding how price reductions affect service usage is of growing importance to the telecommunications industry for purposes of pricing and tariff development. In this paper, an individual-level usage model for telecommunications services is developed and the effects on usage of a price reduction are analyzed. The model is applied to age-stratified aggregate traffic data for a Korean mobile telecommunication service provider. Finally, a 0-1 integer programming model is proposed for choosing which market segment should be targeted with a price reduction to minimize revenue loss. These models can be applied to market segmentation and price reduction strategy.
Publisher
The Korean Operations Research and Management Science Society
Issue Date
2004-10-23
Language
ENG
Description

This article is confirmed to be submitted through the review and edition of the Korean Operations Research and Management Science Society. Please enter the title (Journal/Proceedings), volume, number, and pages properly when citing the article.

Citation

2004년 한국경영과학회 추계학술대회, pp.289 - 303

URI
http://hdl.handle.net/10203/4495
Appears in Collection
KGSM-Conference Papers(학술회의논문)
Files in This Item
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