Financial Implications of Femtocell Deployment

Abstract

Increased usage in wireless communication has been observed in the last decades and it is expected to rise even more. Traditional spectrum allocation mechanism together with increasing demand for data transfers caused spectrum to become more congested. As a consequence, high pressure for its more effective usage emerges. Modern concept of heterogeneous networks with cognitive femtocells represents one of the promising solutions. Associated technical issues of heterogeneous networks have been discussed in many papers. However, economic aspects of femtocell deployment in network are still insufficiently analysed. This paper is devoted to economic aspects of operators’ behaviour in the macro-femto network but we also focus on technical issue of overall spectrum usage. For this purpose, the agent-based model of two-tier network was proposed. Results of simulation confirm significant influence of number of deployed femtocells and their location in the network on operators’ pricing strategies and their whole economic performance.