Game Theory, Brinkmanship, and Wireless Carriers
With the release of Apple Inc.’s new iPhone 14 came a new precedent in the world of wireless carriers. No longer will Apple’s new flagship smartphone have a physical SIM card. Instead, the tech giant has opted to include eSIM, an “industry-standard digital SIM supported by carriers around the world.” While eSIM offers many excellent security benefits, the focus here will be drawn to the convenience factor of being able to store 8+ eSIMs across different carriers.
Consumers have now been given the option and power to seamlessly switch between multiple wireless network providers on the same device, applying pressure to network providers within the wireless carrier market. Jahan Haassan, Mahbub Hassan, and Sajal Das wrote about this new precedent in their piece, “A Brinkmanship Game Theory Model for Competitive Wireless Networking Environment.” They described the possible future in which consumers can leverage their new eSIM capabilities (threatening to quit) to force their current providers to improve/ameliorate their services. While neither the consumer nor the provider wants to acquiesce, the slope down which this scenario slides results in a deeply undesirable outcome for both parties (the user may have to disconnect from their current provider and switch in the middle of using the internet and the provider may lose a customer).
This game is referred to as a “brinkmanship” model, the practice of gradually increasing the threat of an undesirable or often catastrophic outcome in hopes that one’s adversary will acquiesce first. It is discovered in the case of eSIMs and wireless carriers that users really would rather stay than leave though they threaten providers with their leaving. Providers would rather not spend the effort to fix or improve their services and wish to ignore user threats. The payoff matrix for this scenario can be depicted as such:
Though the Nash Equilibrium is listed as (Stay, Ignore), users do not actually know the payoffs for providers. They must thus resort to using probabilistic threats in which users estimate the payoffs for a stubborn provider and the payoffs for a persuadable provider. Users must then take into account how severe of a threat they must make to convince a stubborn provider (in the worst scenario) and how severe of a threat users themselves could tolerate if no one backs down and the catastrophic scenario is reached. The calculations performed in the paper reveal that it is indeed at least theoretically possible for users to benefit from this new eSIM standard and coerce their way into better carrier options.
References:
https://www.cse.unsw.edu.au/~mahbub/LCN10_Brinkmanship_CR.pdf
https://support.apple.com/en-us/HT213448