Multilevel Pricing Schemes in a Deregulated Wireless Network Market

Typically the cost of a product, a good or a service has many components. Those components come from dierent complex steps in the supply chain of the product from sourcing to distribution. This economic point of view also takes place in the determination of goods and services in wireless networks. Indeed, before transmitting customer data, a network operator has to lease some frequency range from a spectrum owner and also has to establish agreements with electricity suppliers. The goal of this paper is to compare two pricing schemes, namely a power-based and a at rate, and give a possible explanation why at rate pricing schemes are more common than power based pricing ones in a deregulated wireless market. We suggest a hierarchical game-theoretical model of a three level supply chain: the end users, the service provider and the spectrum owner. The end users intend to transmit data on a wireless network. The amount of trac sent by the end users depends on the available frequency bandwidth as well as the price they have to pay for their transmission. A natural question arises for the service provider: how to design an ecient pricing scheme in order to maximize his profit. Moreover he has to take into account the lease charge he has to pay to the spectrum owner and how many frequency bandwidth to rent. The spectrum owner itself also looks for maximizing its prot and has to determine the lease price to the service provider.