Modeling Revenue of the Mobile Operator as Depending on the Proposed Tariff Plans

The cellular market is characterized by a deep level of penetration, which leads to high competition among service providers. Under these circumstances customer acquisition is inefficient way of increasing revenue. In the literature, the main factors which determine the profitability of a mobile operator include the size and stability of the customer base, which, in turn, is affected by network effects. The paper examines the impact of network effects on both the diffusion of tariffs within the customer base and the operator's revenue. A diffusion model, logit model and mixed logit model were constructed to estimate the expected revenue. The distinctive feature of the built models is the consideration of spatial mobility of subscribers. The influence of network effects and mobility on revenue was established, which is consistent with previous research.