Optimal Pricing and Spectrum Allocation for Wireless Service Provider on Femtocell Deployment

Femtocell technology is regarded as a promising way to deal with poor indoor coverage and increase spectrum spatial reuse. In this paper, we focus on the scenario that macro and femto base stations are deployed by the same Wireless Service Provider (WSP), which treats the revenue maximization as its ultimate target. In such a system, there are several design factors which will affect the overall revenue, including price decision and resource allocation between macrocell and femtocell. In this paper, we propose an economic framework, where users choose either macrocell or femtocell service to optimize their own utility and the monopolistic WSP tries to maximize its revenue via pricing and spectrum allocation strategy. Theoretical results of optimal prices for macrocell and femtocell are given. Extensive theoretical analysis is carried out to determine the spectrum allocation strategy and evaluate the revenue of the WSP. The system capacity and the ratio of macrocell and femtocell users are also discussed. The results have indicated that the revenue of the WSP is significantly improved by combining the pricing strategy and the spectrum allocation strategy.