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Femtocell Economics

The next generation 4G cellular systems aim at providing end users with high data rates and reliable services by operating at wider and higher frequency bands (e.g., 2496MHz-to-2690MHz for TD-LTE in U.S.). However, severe signal attenuation at these high frequencies often causes poor signal receptions for indoor users, who are far away and separated by walls from outdoor cellular base stations in local macrocells.

To solve the poor signal reception problem for indoor users, researchers have proposed the idea of femtocell. Compared to macrocells, femtocells are short-range, low deployment cost, and low power user-deployed tiny base stations. A user can deploy a femtocell at home and connect it to the wireline broadband Internet connection, e.g., the digital subscriber line (DSL). Femtocells can provide better quality of service (QoS) to indoor users as they are very close to users’ cell phones. Despite of the obvious motivation to deploy femtocell service, the operator needs to carefully consider several issues that will affect the economic return of the femtocell service.

This project investigates the economic incentive for the cellular operator to add femtocell service on top of its existing macrocell service. We model the interactions between a cellular operator and users as a Stackelberg game: in Stage I the operator determines spectrum allocations and pricing decisions of femtocell and macrocell services, and in Stage II the users with heterogeneous macrocell channel qualities and spectrum efficiencies choose between the two services and decide their bandwidth usages. We show that the operator will choose to only provide femtocell service if femtocell service has full spatial coverage as macrocell service. In this case, the operator can serve more users at a higher price and thus obtain a higher profit. However, with the additional requirement that users need to achieve payoffs no worse than using the original macrocell service, we show that the operator will always provide macrocell service (with or without the femtocell service). Moreover, we study the impact of operational cost and limited coverage on femtocell service provision. We show that as the operational cost increases or femtocell coverage decreases, fewer users are served by femtocell service and the operator’s profit decreases. We further look at the pricing and resource allocation decisions when the macrocell operator outsources the femtocell services to an independent service provider. There we need to consider the interaction of market competition and quality improvements due to femtocell services.



Project Team

NCEL Members: Man Hon Cheung, Lingjie Duan, Jianwei Huang
Collaborators: Biying Shou (City University of Hong Kong), Vincent Wong (UBC)

Duan, Lingjie, Biying Shou, and Jianwei Huang. "Capacity Allocation and Pricing Strategies for Wireless Femtocell Services." Production and Operations Management. 25.5 (2016): 866-882. Download: Duan_et_al-2015-Production_and_Operations_Management.pdf (1009.28 KB)
Ma, Bojiang, et al. "Hybrid Overlay/Underlay Cognitive Femtocell Networks: A Game Theoretic Approach." IEEE Transactions on Wireless Communications. 14.6 (2015): 3259-3270. Download: 07042288.pdf (1.09 MB)
Duan, Lingjie, Jianwei Huang, and Biying Shou. "Economics of Femtocell Service Provision." IEEE Transactions on Mobile Computing. 12.11 (2013): 2261-2273. Download: TMC_Femtocell_Final.pdf (3.17 MB)
Duan, Lingjie, Jianwei Huang, and Biying Shou Femtocell Service Provision with Dual Channel Competition. ITC'24 Workshop on Telecom Economics, Engineering and Policy. Krakow, Poland, 2012. Download: ITC2012.pdf (473.64 KB)
Duan, Lingjie, and Jianwei Huang Economic Viability of femtocell Service Provision. International Conference on Game Theory for Networks (GameNets). Shanghai, China, 2011. Download: FemtocellGamenets2011.pdf (372.08 KB)






story | by Dr. Radut