Deployment Strategies in Competitive Wireless Access Networks Pamela Gonz´ alez S´ anchez 1,2 , Jens Zander 1 1 The Royal Institute of Technology KTH, Radio Communication Systems, 164 40 Kista, Sweden 2 National University of Engineering UNI, P.O. Box5595, Managua, Nicaragua Emails: dpgs@kth.se, jenz@kth.se Abstract—The rapid growth of mobile internet traffic has forced wireless service providers to deploy increasingly higher capacity in their wireless broadband access systems. The flat rate revenue streams in combination with the rapidly growing costs associated with conventional access deployment is usually referred to as the “revenue gap”. In this context, various schemes for infrastructure sharing to reduce unnecessary duplication of infrastructure present an interesting solution. Besides explicit cooperation, competitive sharing (“coopetition”) where various access providers provide partially overlapping coverage is one interesting sharing mechanism. In this paper, we analyze such a scheme and study how the operator should deploy their networks, striking a balance between areas of exclusive coverage, where each provider has a monopoly situation, and overlap areas with provider competition, to achieve maximal profitability. The com- petition is based on the proportionally fair auction scheme. The users behave selfishly as they bid for the various access providers. The access providers compete with each other by selecting the so called reservation price. Results are expressed in terms of Nash equilibrium solutions, which are numerically derived for some sample scenarios. Results indicate that the fraction of coverage overlap does play an important role for both the performance of the system and the profitability of the service providers. As the level of overlap between the two networks increases the revenue that each base station gets decreases significantly. In addition, the user experienced throughput degrades considerably for low demand but the cost per transferred Megabyte is not greatly affected. Further, we conclude that a win-win situation for both users and access providers can be achieved with a suitable overlap coverage by two networks. Index Terms—Wireless access markets; coverage overlap; com- petition; resource allocation; Nash equilibrium I. I NTRODUCTION A. Overview The rapid increase of mobile internet traffic has put the spotlight on how the future wireless broadband access systems should be deployed and operated at significant lower costs per transmitted bit than today. The flat rate revenue streams in combination with the rapidly growing costs associated with conventional access deployment is usually referred to as the “revenue gap. Nowadays, closing this “gap” is on top of the priority list of wireless mobile service providers. Low cost deployment and more efficient utilization of existing resources are key solutions to be investigated. The traditional way of infrastructure deployment has been that every service provider offers his own access system in all locations, i.e., achieving “full” coverage by himself. This has been possible in most mobile phone systems due to the relatively low costs and high profit margins. As the increasing data rates require a much denser (and more expensive) network of base stations, full coverage is no longer an option to most service providers. Instead Infrastructure sharing, where providers share infrastructure in low user density areas is one possible alternative to offer better coverage and quality of service (QoS) in a cost efficient manner [1]. The sharing of wireless infrastructure, however, raises the question of how resources and revenues should be divided when multiple subsystems, managed by potentially competing actors, are involved in delivering the access service. An alternative would be to share the infrastructure implicitly by establishing an open wireless access market wherein networks not only compete for users on a long-term time-scale, but also on a much shorter time-base. This could be realized with an architecture where autonomous trade-agents, that reside in terminals and access points (APs) or base stations (BSs), manage the resources through negotiations [2]–[5]. In competitive multi-user networks, services are provided to users that are assumed to be rational, choosing strategies in order to maximize their own utility. This resource management problem can be expressed as a noncooperative game and the system performance can be analyzed in terms of the Nash equilibrium, i.e., a set of optimal bids such that no single user wishes to deviate from its bid given that the bids of the other users remain the same and cannot further improve their utility [6]–[8]. B. Prior Work In [2], the authors developed a framework for studying demand-responsive pricing in contexts where access points (APs) with fully overlapping coverage compete for users. Resources are partitioned through a proportional fair divisible auction and they investigated if, and when, an open market for wireless access can be self-sustained. They showed that in scenario where access providers (APs) compete an open access market results in better services at lower price, compared to a case where APs cooperate. They utilized an architecture where autonomous trade-agents manage the resources through negotiations. In [4], a market-based framework for decentralized radio resource management in environments populated by multiple, 7 COCORA 2011 : The First International Conference on Advances in Cognitive Radio Copyright (c) IARIA, 2011. ISBN: 978-1-61208-131-1