Entry and Spectrum Sharing Scheme Selection in Femtocell Markets

Focusing on a femtocell communications market, we study the entrant network service provider’s (NSP’s) longterm decision: whether to enter the market and which spectrum sharing technology to select to maximize its profit. This long-term decision is closely related to the entrant’s pricing strategy and the users’ aggregate demand, which we model as medium-term and short-term decisions, respectively. We consider two markets, one with no incumbent and the other with one incumbent. For both markets, we show the existence and uniqueness of an equilibrium point in the user subscription dynamics, and provide a sufficient condition for the convergence of the dynamics. For the market with no incumbent, we derive upper and lower bounds on the optimal price and market share that maximize the entrant’s revenue, based on which the entrant selects an available technology to maximize its long-term profit. For the market with one incumbent, we model competition between the two NSPs as a non-cooperative game, in which the incumbent and the entrant choose their market shares independently, and provide a sufficient condition that guarantees the existence of at least one pure Nash equilibrium. Finally, we formalize the problem of entry and spectrum sharing scheme selection for the entrant and provide numerical results to complement our analysis.