This project studies the optimal pricing and the impact of the provider interaction structures on the overall Internet of Things (IoT) system with massive heterogeneous customers. 

Importance/impact, challenges/pain points

Importance:

An IoT system can include several different types of service providers, who sell IoT service, network service, and computation service to customers, either jointly or separately. The complicated coupling among these providers in terms of pricing and service decisions is an under-explored research area, the understanding of which is critical to the success of IoT networks. 

Challenges:

1. Service providers need to serve massive number of IoT customers, who have heterogeneous demands on computation and network resources as well as different usage levels of the IoT service. 

2.There exist multiple kinds of service providers with complementary services but diverse objectives in IoT systems. 

3. The complex interaction among customers and service providers also significantly influences the price design.
Solution description

We consider three interaction structures: coordinated, vertically-uncoordinated, and horizontally-uncoordinated structures, and we use multi-stage game to model the interaction. Despite the challenging non-convex optimization problems involved in modeling and analyzing these structures, we successfully obtain the closed-form optimal pricing strategies of providers in each interaction structure. 

Key contribution/commercial implication

To the best of our knowledge, this is the first analytical work that studies the optimal pricing for massive heterogeneous IoT customers under different interaction structures. Such a study is practically important for the sustainable development of profitable IoT systems.

Next steps

1. Extend the model to specific IoT scenarios.

2. Use real-world data to validate our results and develop a more complicated and practical customer utility model for further study.

Collaborators/partners

Harbin Institute of Technology (Shenzhen) and Huawei Technologies

Team/contributors

Team Leader: Jianwei Huang.

Team Member: Ningning Ding, Lin Gao, Xin Li, Xin Chen.