Competitive Resource Allocation in HetNets: the Impact of Small-cell Spectrum Constraints and Investment Costs

TL;DR

This paper examines how spectrum restrictions and investment costs influence resource allocation, pricing, and market structure in competitive HetNets with small-cell deployments, affecting social welfare and strategic decisions.

Contribution

It provides a novel analysis of the combined impact of spectrum constraints and investment costs on resource allocation and market equilibrium in HetNets.

Findings

Optimal resource allocation can be uniquely determined with constraints and costs.

Spectrum restrictions and costs significantly alter market structure and competition.

Strategic SPs' decisions are heavily influenced by deployment costs and spectrum limitations.

Abstract

Heterogeneous wireless networks with small-cell deployments in licensed and unlicensed spectrum bands are a promising approach for expanding wireless connectivity and service. As a result, wireless service providers (SPs) are adding small-cells to augment their existing macro-cell deployments. This added flexibility complicates network management, in particular, service pricing and spectrum allocations across macro- and small-cells. Further, these decisions depend on the degree of competition among SPs. Restrictions on shared spectrum access imposed by regulators, such as low power constraints that lead to small-cell deployments, along with the investment cost needed to add small cells to an existing network, also impact strategic decisions and market efficiency. If the revenue generated by small-cells does not cover the investment cost, then there will be no deployment even if it increases social welfare. We study the implications of such spectrum constraints and investment costs on resource allocation and pricing decisions by competitive SPs, along with the associated social welfare. Our results show that while the optimal resource allocation taking constraints and investment into account can be uniquely determined, adding those features with strategic SPs can have a substantial effect on the equilibrium market structure.