The economics of shared data plans

The demand for mobile broadband is doubling every year, forcing ISPs to use pricing as a congestion control mechanism. The largest US ISPs, AT&T and Verizon, have already terminated unlimited offerings in favor of "cap and meter" pricing plans with $10/GB overages. More recently, both ISPs have introduced shared data plans in which multiple devices share a data cap. However, such measures to curb demand can have adverse implications for mobile commerce and online content consumption. Hence, a study of the role of overage fees, usage caps, and shared data plans on the consumer's utility is needed. In this work, we introduce an analytical framework for studying the economics of such shared data plans and model the consumer utility of choosing between shared and separate (individual) data plans for their devices. We utilize usage data from a trial of 34 iPhone and iPad users to explore this tradeoff, and show that the choice between individual and shared data plans depends heavily on consumer's willingness to reduce usage upon exceeding the data cap. Our work creates a framework to study this dependency and indicates the importance of analyzing the impact of such data plans on consumer choice.