provision of mobile data services: portfolio analysis

Alexei A.Gaivoronski

IKT Økonomi 1

Provision of mobile data services: portfolio analysis

Norwegian University of Science and Technology, Trondheim, Norway

[email protected]

Alexei A. Gaivoronski


IKT Økonomi 2

Design of composite service

• Telecommunications

• IT services

• ....


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Example of structural description of service provision


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Different constellations of roles


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Service architecture

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2

risk

return

feasible set

R

x

efficient frontier

x0x1

x2


IKT Økonomi 6

Services, roles and actorsusers services Components, enablers, roles

SPICE

actors


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Economic requirements• Platform should be attractive for all actors• Actors should feel incentive to join service

provision, that is they should want to join cooperative effort because they will benefit from it

• Services should provide to actors a competitive source of profit

• Risk/return considerations: risk that users will not accept the service as expected, cannibalizing, etc


IKT Økonomi 8

Approach of modern financial theory

• Actors participate in service(s) provision assuming roles and providing components for services

• Quantify cash flow, profits and risks• Each actor will select tradeoff between profit and risk

exposure according to its preferences• This will result in service portfolio for each actor• Coordination tools should assure that the actors will

select on their own accord participation in service provision in required proportion


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Risk/return tradeoff

risk

return

feasible set

R

x

efficient frontier

x0x1

x2


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Quantitative modelDescription of service

• Services consist of components which my be provided by different actorsN components indexed by i and M services indexed by j

ij - share of component i in service j.

Description of service through components:

• Service generate revenue vj

– Revenue sharing coefficients

– Actor who contribures with component i recieves revenue

j 1j , . . , Nj

j 1j , . . , Nj

ijv i


IKT Økonomi 11

Description of actors• Actors assume roles by providing service components• This incurs costs and brings revenue

K actors indexed by k

cik – unit provision costs for actor k providing component i

Wik – provision capability of component i by actor k

xijk – the portion of provision capability for component i of actor k dedicated to participation in provision of service j.

Profit model for actor k

xijkWik - the volume of provision of component i dedicated by actor k to service j


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– xijkWik/λij- volume of service j in which the actor k participates

– vjxijkWki/λij - the total revenue from this service

– vjxijkWkiγij/λij - the part of the revenue which goes to actor k

– Profit of actor k:

k j 1

M

v jx ijkWik ij

ij x ijkc ikW ik

j 1

M

x ijkWikc ikv j ij

cik ij 1


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• Basic case: an actor provides only one component– Profit

– Return

– Portfolio viewpoint: an actor chooses portfolio of services to which contribute

i Wic i j 1

M

x ijv j ij

ci ij 1

r i j 1

M

x ijv j ij

ci ij 1

x i x i1, . . . , x iM


IKT Økonomi 14

Portfolio viewpoint– Return coefficients associated with participation in

each service

– expected return coefficients

– expected return

• Risk that actual return will be different from expected return or even become loss

r ij v j ij

ci ij 1

ij ijEv j

ci ij 1

r i j 1

M

ijx ij j 1

M

x ij ijEv j

ci ij 1


IKT Økonomi 15

Efficient service portfolios

• Problem to solve for computing eficient frontier

minx StDev2 j 1

M

x ijv j ij

ci ij 1

j 1

M

x ij ijEv j

ci ij 1

j 1

M

x ij 1, x ij 0


IKT Økonomi 16

Next level: quantitative coordination

• What is necessary is that the whole service provision platform functions properly

• And this means that different actors should independently make decisions to participate in different services which nevetherless will provide coordinated result.

• Revenue sharing coefficients should be chosen in order to achieve this


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Coordinator (service provider) problem

Paper is available on Edition 1 of the model set


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Architecture of the DSS prototype

Mathematicalmodel

Top level algorithmsScenario generation

Postprocessing

Problem solvers

Data and userinterface

Data User interaction

Results presentation

Excel MATLAB

XPRESS

SQG

CPLEX

results

data

User intervention

Service modelDetailed service

structure, resources

Service description


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Screenshot 1 of demo of DSS prototype


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Screenshot 2 of demo of DSS prototype


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Example: business person on the move


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Risk/performance preferences

0.05

0.1

0.15

0.2

0.25

0.3

0 0.2 0.4 0.6 0.8

risk

pro

fit


IKT Økonomi 23

Market shares

0

0.2

0.4

0.6

0.8

1

0 0.2 0.4 0.6 0.8

risk

pla

tfo

rm s

erv

ices


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Price competition

0

0.2

0.4

0.6

0.8

1

0.18 0.2 0.22 0.24 0.26 0.28 0.3 0.32 0.34

risk

pla

tfo

rm s

ervi

ces

-10%

-5%

+5

10


IKT Økonomi 25

Summary

• Service design and planning constitutes a rich source of optimization problems under uncertainty

• They are not necessarily linear but they are worth solving

provision of mobile data services: portfolio analysis

Documents

actor kprofit of actor

provision of service

component i of actor

services provision

service componentsthis

riskseach actor

service jprofit model

volume of provision