Abstract
Cellular operators have always relied on static deployments for providing wireless access. However, even the emerging fifth-generation (5G) networks may face difficulty in supporting the increased traffic demand with a rigid, fixed infrastructure without substantial over-provisioning. This is particularly true for spontaneous large-scale events that require service providers to augment the capacity of their networks quickly. Today, the use of aerial devices equipped with high-rate radio access capabilities has the potential to offer the much needed “on-demand” capacity boost. Conversely, it also threatens to rattle the long-standing business strategies of wireless operators, especially as the “gold rush” for cheaper millimeter wave (mmWave) spectrum lowers the market entry barriers. However, the intricate structure of this new market presently remains a mystery. This paper sheds light on competition and cooperation behavior of dissimilar aerial mmWave access suppliers, concurrently employing licensed and license-exempt frequency bands, by modeling a vertically differentiated market where customers have varying preferences in price and quality. To understand viable service provider strategies, we begin by constructing the Nash equilibrium for the initial market competition by employing the Bertrand and Cournot games. We then conduct a unique assessment of short-term market dynamics, where licensed-band service providers may cooperate to improve their competitive positions against the unlicensed-band counterparts intruding on the market. Our analysis studies the effects of various market interactions, price-driven demand evolution, and dynamic profit balance in this novel type of ecosystem.
Highlights
AND BACKGROUND A. 5G DEVELOPMENT UPDATE The initial stage of the global research on fifth-generation (5G) radio access systems has essentially been completed, and the respective standardization by 3GPP is progressing atThe associate editor coordinating the review of this manuscript and approving it for publication was Yulong Zou.full speed with the first 5G New Radio Release 15 frozen in June 2018 [1]
Another finding of this paper is in understanding how the outcome of the initial licensed-band service providers (LSPs) competition is influenced by customer preferences willing to pay more or less for a higher quality product. We introduce another entity into our system, an unlicensed-band service provider (USP) operating in the free-to-use mmWave spectrum, and study the dynamics of the resulting market
While in case of the Bertrand market the LSP i controls the price pi so that the share of users is naturally derived through the demand function, in the Cournot market the LSPs control the quantity of customers and, the prices are determined based on the following inverted system of demand functions:
Summary
AND BACKGROUND A. 5G DEVELOPMENT UPDATE The initial stage of the global research on fifth-generation (5G) radio access systems has essentially been completed, and the respective standardization by 3GPP is progressing at. Our methodology at its initial stage studies market equilibria in which the LSPs first determine the specification of their offered products (i.e., mobile subscriptions) and decide on the prices or the quantities of the products they sell according to a Bertrand or a Cournot competition model, respectively [30]. CONTRIBUTIONS OF THIS WORK We envision that the aerial mmWave access technologies will play a pivotal role in the emerging 5G market To leverage their full potential, they will need to be accompanied by new powerful methodologies able to capture the intricate market dynamics and characterize the practical benefits for all the involved stakeholders. Our dynamic game theoretic methodology allows to carefully follow the cooperative interactions between the LSPs and their competition against the USP counterpart, as well as thoroughly characterize both priceand sociality-driven evolution of customer preferences when making the service provider selection. The simulation results are made available to validate the core assumptions of our proposed analytical framework, assess the true market dynamics, and support the key practical learnings
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