RAdio resource Management and Optimization134 Sinchon-Dong, Seodaemun-Gu, Seoul, 120-749, KoreaPhone : +82-2-2123-7774E-mail : lab@ramo.yonsei.ac.krHomepage : http://ramo.yonsei.ac.krSchool of EEE, Yonsei University

Guaranteeing User Welfare in Network Service:Comparison of Two Subsidy Schemes

RAdio resource Management and Optimization Laboratory (RAMO)School of EEE, Yonsei University, Seoul, Korea

{smyu, slkim}@ramo.yonsei.ac.kr

Seung Min Yu and Seong-Lyun Kim

ACM SigmetricsW-PIN, London

RAdio resource Management and OptimizationYONSEI UNIVERSITY

Contents

• Background (Motivation of the Study)– User Welfare– Two Subsidy Schemes

• System Model– User Demand, QoS, Service Price, and NSP’s Profit Maximization

• Comparison– Conventional, Price- and QoS Subsidy Schemes

• Discussion– A Hybrid Subsidy…

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Motivation

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User Welfare

Decrease of User Welfare?

“Some users cannot consume data because they are economically unstable, or live in ru-ral area”

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Players in Network Service

NSPs

Net-works Users

Inves

tmen

t

QoS

Demand

PriceRevenue

RegulatorRegulation

CournotCompetition

(Capacity)

BertrandCompetition

(Price)

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Two Subsidy Schemes

• Price Subsidy Scheme– The regulator gives an equal price subsidy to each user that ac-

cesses network service.– Source of the price subsidy is from the spectrum sales revenue.

• QoS Subsidy Scheme– The regulator gives all of the available spectrum amount to net-

work service provider (NSP) for free in return for providing a pre-defined QoS level to users without any charge.

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System Model

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User Behavior

• We consider three schemes.– Price subsidy scheme– QoS subsidy scheme– Conventional scheme (no subsidy)

• Each user decides whether to access the network or not considering the service price and QoS.

• Each user has own QoS requirement and willingness to pay for it (User Type).

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Mathematical Notations

: total number of users: NSP's spectrum usage amount: NSP's service price, 0,1

: NSP's QoS level, 0,1

: ratio of accessing users (if all users access the network, then 1): user type, 0,1

:

Mkp p

q q

d d

cost of the unit spectrum amount: price subsidy amount: QoS subsidy amountpq

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User Type and QoS Modeling (J. Walrand)

• Price ≤ User Type ≤ QoS

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User Demand

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• Price and QoS conditions

User Type, Demand, Service Price and QoS

<Conventional Scheme>

<QoS Subsidy Scheme>

0 1minc cp

0 1

0 1

<Price Subsidy Scheme>

maxc cq

minq qp q

maxq qq

minp pp p

pp

q

maxp pq

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NSP’s Profit Maximization Problem

<Conventional Scheme>

<QoS Subsidy Scheme>

<Price Subsidy Scheme>

,

max 11

s.t.

c c

cc c c c c c cp k

c

c

kp d M k d pk

k k

,

max 11

s.t.

p p

pp p p p p p pp k

p

p

kp d M k d p p

k

k k

,

max 11

s.t. 1

q q

qq q q q qp k

q

q

kp d M d p

k

q qk k

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Comparison

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Optimal Solution

• Conventional Scheme

• Price Subsidy Scheme

• QoS Subsidy Scheme

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Conventional- vs. Price Subsidy Scheme (1/3)

• Maximal Spectrum Usage

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Conventional- vs. Price Subsidy Scheme (2/3)

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Conventional- vs. Price Subsidy Scheme (3/3)

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0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.50

0.5

1

1.5

2

2.5

3

QoS Subsidy Level

Gai

n

(a)

User Welfare Gain (Uq/Up)

NSP Profit Gain (Nq/Np)

Social Welfare Gain ((Uq+Nq)/(Up+Np))

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.50

0.5

1

1.5

2

2.5

3

QoS Subsidy LevelG

ain

(b)

User Welfare Gain (Uq/Up)

NSP Profit Gain (Nq/Np)

Social Welfare Gain ((Uq+Nq)/(Up+Np))

Price- vs. QoS Subsidy Scheme2k 5k

• If the regulator has sufficient spectrum for the network service, then the QoS subsidy scheme will be a good choice for all players in the network service mar-ket.

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Discussion

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Summary

• We introduced price and QoS subsidy schemes, and analyze the effect of each scheme.

• If the regulator has sufficient spectrum for the network service, then the QoS subsidy scheme will be a good choice for all players in the network service market.

• On the other hand, if the regulator does not have sufficient spec-trum, the price subsidy scheme can be better for user welfare.

• For taking advantage of both price and QoS subsidy schemes, we can suggest a hybrid subsidy scheme.

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A Hybrid Subsidy Scheme

• The regulator sells all of the available spectrum amount with a discounted price (not free) and requires NSP to provide a prede-fined QoS level for free.

• At the same time, the regulator gives a price subsidy to users from the spectrum sales revenue.

0 0.05 0.1 0.15 0.2 0.25 0.3 0.35 0.4 0.45 0.50

0.5

1

1.5

2

2.5

3

QoS Subsidy Level

Gai

n

(a)

User Welfare Gain (Uq/Up)

NSP Profit Gain (Nq/Np)

Social Welfare Gain ((Uq+Nq)/(Up+Np))

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Q&A

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References

1. Cisco, “Cisco visual networking index: Global mobile data traffic forecast update, 2010-2015,” Cisco white paper, 2011.

2. S. M. Yu and S.-L. Kim, “Price war in wireless access networks: A regulation for convergence,” Pro-ceedings of IEEE GLOBECOM, 2011.

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5. European Commission, Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 on universal service and users rights relating to electronic communications networks and services.

6. C. Bazelon, “Licensed or unlicensed: The economic considerations in incremental spectrum alloca-tions,” IEEE Communications Magazine, vol. 47, no. 3, pp. 110-116, 2009.

7. T. Nguyen, H. Zhou, R. Berry, M. Honig and R. Vohra, “The impact of additional unlicensed spectrum on wireless services competition,” Proceedings of IEEE DySPAN, 2011.

8. A. Odlyzko, “Paris metro pricing for the Internet,” Proceedings of the ACM Conference on Electronic Commerce, pp. 140-147, 1999.

9. J. Walrand, Economic Models of Communication Networks. New York: Springer, Ch. 3, pp. 57-87, 2008.10. N. Shetty, G. Schwartz, and J. Walrand, “Internet QoS and regulations,” IEEE/ACM Transactions on

Networking, vol. 18, no. 6, pp. 1725-1737, 2010.11. R. Gibbens, R. Mason, and R. Steinberg, “Internet service classes under competition,” IEEE Journal on

Selected Areas in Communications, vol. 18, no. 12, pp. 2490-2498, 2000.

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