A Token Pricing Scheme for Internet Services

Flat-rate pricing has been the dominant scheme for tariffing Internet services due to its popularity and simplicity. However, this scheme does not provide incentives for users to use network resources efficiently. As the demand for wireless video and other resource-intensive services grows faster than the providers’ ability to expand the network capacity, this inefficiency becomes critical. This situation has led numerous researchers and practitioners to explore new pricing schemes. In this spirit, we introduce a pricing scheme called Token Pricing that is both practical and efficient. As in flat-rate pricing, the users face a fixed price. However, users consume tokens when they want a higher quality of service while the network is congested. This mechanism encourages users to congest the network only when they have a high utility for the service. As a result, users make a better use of the resources and the social welfare increases.