http://www.wsj.com/articles/t-mobile-cracks-down-on-heavy-data-users-1441963980
T-Mobile has made a substantial effort to stop users from tethering their phones to a computer allowing the computer to have 3G/4G Internet connection. Cell phone companies provide Internet access to their customers on their smartphone. T-Mobile, the least profitable of the four carriers, has been offering generous deals on data plans to attract customers. However, as customers begin to use these data plans with high limits or no limit on data, tethering becomes an issue. This is because the excessive data usage puts a strain on T-Mobile’s network?
This is becoming problematic for T-Mobile. T-Mobile can use game theory to weigh its options. The participants of the game are T-Mobile and its customers. T-Mobile has to develop a strategy on what products to offer its customers. If T-Mobile keeps offering these large data plans, they will likely have to upgrade their network to support the large data plans. By contrast, T-Mobile could start offering lower data caps and potentially lose customers. Or T-Mobile could try to crack down on large data users to try to alleviate network strains. T-Mobile risks losing customers if they crack down on this behavior. T-Mobile had to choose one of these strategies in order to maximize profitability. T-Mobile could weigh the effects of each decision using a payoff matrix.
When businesses are trying to maximize profits, they use game theory to weigh key decisions. Using all of the game theory principals that we discussed in class, a company like T-Mobile could maximize profits by using the payoff matrix to evaluate the different strategies the company to utilize.