A new pricing model for competitive telecommunications services using congestion discounts

We propose a two-stage pricing approach that enables providers of telecommunications services to guarantee quality of service to their customers. The scheme is intended to shift demand during congestion periods to periods of lower demand by offering price discounts as an incentive to users to delay service during the high-demand periods. The price-discount offers act as a congestion-avoidance scheme that also balances communication traffic across different time periods. To get the scheme to work, we provide methods to evaluate when to offer the discounting scheme, estimate what proportion of customers accept the discounts, and how much the price discounts should be. In addition to offering a novel pricing structure, we show the optimal solution to the problem can be computed in a sequential manner from one period to the next, greatly simplifying implementation. Furthermore, we develop the model under uncertainty to emphasize the key implementation features of simple computations that can be performed in real time using sampled information online. We use simulations to demonstrate the scheme's usefulness in regulating peak period demand.