Competitive Spectrum Allocation in Heterogeneous Coverage Areas

It could be costly to deploy a full coverage mobile broadband service with high bandwidth for a single operator. The development of low cost radio network equipment for short range coverage could trigger off a new scenario. Some providers may invest heavily to provide coverage in a wide area, while other providers would invest considerably less to provide coverage in a "hotspot" (small area). There exist two business models; in the first, the providers share their networks explicitly in a cooperative manner. In the second model, the providers compete with each other for users. This paper studies the competitive case, where providers have heterogeneous (partially overlapping) coverage. We analyse which service provisioning conditions are viable to the hotspot provider. The obtained results highlight the importance of infrastructure investments that characterized by degree of competition in the market. The system performance is also affected by the choice of sensitivity towards price and QoS. The results indicate that the hotspot provider could have a profit under given spectrum access mechanism and competition setting, which both would affect the level of the its profitability.