An economic analysis of wireless network infrastructure sharing

Abstract

Internet service providers (ISPs) struggle to invest in upgrading their networks to catch up with growing mobile data demand, while users have to face significant data overage fees. Pooling ISPs' network infrastructures can potentially enable better user experience and lower prices. For example, Google recently launched a cross-carrier MVNO (mobile virtual network operator) data plan called Project Fi, where users' devices can automatically access either of two partner cellular networks or any available open WiFi network. We consider the economic impact of cross-carrier MVNOs on the mobile data market. We begin by analyzing a network selection strategy that optimizes cross-carrier users' costs. We then study ISPs' behavior, deriving the prices that partner ISPs charge the cross-carrier MVNO and that the cross-carrier MVNO charges its end users. Although the cross-carrier MVNO may lose money from selling data, it can offset this loss with side revenue, e.g., advertisement revenue when users consume more content. We derive conditions under which the cross-carrier MVNO achieves a profit and its users reduce their costs. Finally, we use a real-world network quality dataset to simulate users' network selection behavior and demonstrate the benefits of the ISP competition brought by the cross-carrier MVNO.