Efficient Power Control via Pricing in Wireless Data Networks ∗ Cem U. Saraydar † Lucent Technologies 101 Crawfords Corner Road Room 3K-311 Holmdel, NJ 07733 saraydar@lucent.com Narayan B. Mandayam ‡ WINLAB, Rutgers University 73 Brett Road Piscataway, NJ 08854-8060 narayan@winlab.rutgers.edu David J. Goodman Dept. of Elect. Eng. Polytechnic University 6 Metrotech Center Brooklyn, NY 11201, USA dgoodman@duke.poly.edu August 7, 2001 Abstract A major challenge in operation of wireless communications systems is the efficient use of radio resources. One important component of radio resource management is power control, which has been studied extensively in the context of voice communications. With increasing demand for wireless data services, it is necessary to establish power control algorithms for information sources other than voice. We present a power control solution for wireless data in the analytical setting of a game theoretic framework. In this context, the quality of service (QoS) a wireless terminal receives is referred to as the utility and distributed power control is a non-cooperative power control game where users maximize their utility. The outcome of the game results in a Nash equilibrium that is inefficient. We introduce pricing of transmit powers in order to obtain Pareto improvement of the non-cooperative power control game, i.e., to obtain improvements in user utilities relative to the case with no pricing. Specifically, we consider a pricing function that is a linear function of the transmit power. The simplicity of the pricing function allows a distributed implementation where the price can be broadcast by the base station to all the terminals. We see that pricing is especially helpful in a heavily loaded system. Keywords Power control, wireless data, game theory, pricing, pareto efficiency 1 Introduction As the demand for wireless services increases, efficient use of resources grows in importance. A fundamental component of radio resource management is transmitter power control. It is well known that minimizing interference using power control increases capacity [1–3] and also extends battery life. Recently, an alter- native approach to the power control problem in wireless systems based on an economic model has been ∗ This work is supported in part by the NSF through the KDI program under grant number IIS-98-72995. This paper was presented in part at the IEEE Wireless Communications and Networking Conference 1999 † This work was completed while the author was with WINLAB, Rutgers University. ‡ N. Mandayam is also supported by the NSF under a CAREER award CCR-9874976. 1