Title: Customer perceptions toward dynamic pricing for wireless data service

Authors: Pilsung Choe; Jing Wu

Addresses: Department of Mechanical and Industrial Engineering, Qatar University, P.O. Box 2713, Doha, Qatar ' Booth School of Business, University of Chicago, 5807 S Woodlawn Ave, Chicago, IL 60615, USA

Abstract: Dynamic pricing policy allows the network operator to charge a cost per byte based on the network usage and the traffic load, which can potentially attract greater user consumption and increase operator's revenue. In this paper, we conduct an empirical study on user attitude towards dynamic pricing for wireless data services to examine whether average revenue per user (ARPU) can be effectively enhanced. Using structural equation modelling (SEM) based on 211 datasets collected in the California Bay Area, we reach the following conclusions: 1) consumers agree that current flat-rate wireless data pricing is too high and rigid and can be more flexible; 2) dynamic pricing can increase user satisfaction of the service; 3) dynamic pricing can increase the revenue for operators. Overall, we conclude that dynamic pricing can on one hand provide a better quality of service (QoS) to users and on the other hand achieve greater revenue for the wireless operator.

Keywords: dynamic pricing; SEM; structural equation modelling; wireless data services; user satisfaction; customer perceptions; quality of service; QoS; behavioural intention; average revenue per user; USA; United States; flat-rate pricing; price rigidity.

DOI: 10.1504/IJMC.2015.067962

International Journal of Mobile Communications, 2015 Vol.13 No.2, pp.172 - 187

Received: 24 Jan 2013
Accepted: 29 Oct 2013

Published online: 12 Mar 2015 *

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