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I was in Wellington bar Matterhorn this time when the XT network failed. The first I knew of it was a text message from my boss asking if my phone was able to make calls, as she had been unsuccessful in calling me from her XT handset. Sure enough, a few attempts to make calls failed and while I was able to send text messages, the outage stretched on into the evening for around three hours.

Since then I’ve spoken to several senior business people who have quite genuinely told me they are heading for the exits where Telecom’s XT network is concerned – and that will either mean a move back to the CDMA network or a move to Vodafone. The blood on the floor at Telecom and Alcatel Lucent may go some way to placate corporate customers furious at the numerous outages that have occurred, but money talks and only serious compensation will keep those wavering onboard.

So how do you decide how much is fair compensation for a network outage? Well, there’s actually a scientific equation for calculating such things that has been proposed by researchers. The paper Game Theoretic Outage Compensation in Next Generation Mobile Networks was published in May last year in the journal IEEE Transactions on Wireless Communications proposes a game theory-based compensation algorithm.

Here’s the paper’s abstract:

Changes in network dynamics (e.g., link failure, congestion, buffer overflow and so on) may render ubiquitous service access untenable in the Next Generation Mobile Network (NGMN). Since the commercial viability of a network in a competitive market depends on the perceived user satisfaction, to atone for the loss of the guaranteed service access, it is desirable to compensate the users either with future quality-of-service (QoS) enhancements and/or price reductions.

Focusing on the price reduction aspect, this paper proposes a non-cooperative game theory based compensation algorithm that derives the best outage compensation (i.e., price reduction for the outage period t) over different service types. Taking into account all-IP based applications in the future, the service types are categorized into different classes such as flat rate based (i.e., cents for the entire session(s)), time based (i.e., cents per minute), volume based (i.e., cents per MB), etc., whereupon the compensation algorithm is translated into an n-player game, based on the current subscription profiles. With step sized cost reductions, the selection of the outage compensation is governed by the Nash equilibrium points and fairly allocates cost reduction among the ongoing service types.

Telecom offered up $5 million in compensation to customers following its second major XT outage. Whether that was a mathematical calculation based on any compensation model hasn’t been revealed, but it is likely that any further compensation will be over the odds on anything an algorithm can come up with…

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