  To alleviate the congestion caused by rapid growth in demand for mobile data,
wireless service providers (WSPs) have begun encouraging users to offload some
of their traffic onto supplementary network technologies, e.g., offloading from
3G or 4G to WiFi or femtocells. With the growing popularity of such offerings,
a deeper understanding of the underlying economic principles and their impact
on technology adoption is necessary. To this end, we develop a model for user
adoption of a base technology (e.g., 3G) and a bundle of the base plus a
supplementary technology (e.g., 3G + WiFi). Users individually make their
adoption decisions based on several factors, including the technologies'
intrinsic qualities, negative congestion externalities from other subscribers,
and the flat access rates that a WSP charges. We then show how these user-level
decisions translate into aggregate adoption dynamics and prove that these
converge to a unique equilibrium for a given set of exogenously determined
system parameters. We fully characterize these equilibria and study adoption
behaviors of interest to a WSP. We then derive analytical expressions for the
revenue-maximizing prices and optimal coverage factor for the supplementary
technology and examine some resulting non-intuitive user adoption behaviors.
Finally, we develop a mobile app to collect empirical 3G/WiFi usage data and
numerically investigate the profit-maximizing adoption levels when a WSP
accounts for its cost of deploying the supplemental technology and savings from
offloading traffic onto this technology.
