Technology Choices and Pricing Policies in Wireless Networks

This paper studies the provision of a wireless network by a monopolistic service provider who may be either benevolent (seeking to maximize social welfare) or selfish (seeking to maximize provider profit). The paper addresses questions that do not seem to have been studied in the engineering literature on wireless networks: Under what circumstances is it feasible for a provider, either benevolent or selfish, to operate a network in such a way as to cover costs? How is the optimal behavior of a benevolent provider different from the optimal behavior of a selfish provider, and how does this difference affect social welfare? And, most importantly, how does the medium access control (MAC) technology influence the answers to these questions? To address these questions, we build a general model, and provide analysis and simulations for simplified but typical scenarios; the focus in these scenarios is on the contrast between the outcomes obtained under carrier-sensing multiple access (CSMA) and outcomes obtained under time-division multiple access (TDMA). Simulation results demonstrate that differences in MAC technology can have a significant effect on social welfare, on provider profit, and even on the (financial) feasibility of a wireless network.

I. Introduction

There has been much recent debate about the deployment of wireless networks that would allow Internet access in public areas. Central to this debate is the tradeoff between costs and benefits. Surprisingly, this debate seems to have ignored that the costs and benefits of such wireless networks depend crucially on the technology that is or could be employed. The purpose of this paper is to provide a framework for exploring the influence of technology on the costs and benefits of wireless networks and to demonstrate in a simple scenario that the feasibility and desirability of such a network may depend on the technology chosen. We show that the analysis depends crucially on the technology layer, the application layer, and the economic layer, and most crucially of all, on the interactions between these layers.