Optimal Spectrum Allocation and Pricing for Two-tiered Heterogeneous Cellular Networks

Femtocells can effectively improve the coverage of indoor cellular users. This paper investigates the incentive for the holders of femtocell base stations to add femtocell service and achieve open subscriber group, and discusses the optimal spectrum allocation between macrocell and femtocells. The interactions between base stations and users are formulated by a Stackelberg game: The base stations first determine spectrum allocations and pricings of femtocell and macrocell services, and then heterogeneous users choose between the two services and the amount of resource to request. The relationship between the spectrum price and users’ demand is analyzed. The optimal strategy of spectrum allocating and pricing for base stations is proposed based on Nash bargaining solution. The strategy can reasonably allocate spectrum between macrocell and femtocell according to their demands and quantitatively measure spectrum utility improve by femtocell. Meanwhile, the proposed strategy maximizes the profits of both the operator and the holders of femtocell base stations. The simulation results show that the proposed method brings more gains for both operators and the owners of femtocell base stations than the non-cooperative method. Deployments of femtocell base stations dramatically improve the utilities of the operator.