1. RAdio resource Management and Optimization 134 Sinchon-Dong, Seodaemun-Gu, Seoul, 120-749, Korea Phone : +82-2-2123-7774 E-mail : lab@ramo.yonsei.ac.kr Homepage : http://ramo.yonsei.ac.kr School 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 Sigmetrics W-PIN, London

2. RAdio resource Management and Optimization YONSEI 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… 2/24

3. RAdio resource Management and Optimization YONSEI UNIVERSITY Motivation 3/24

4. RAdio resource Management and Optimization YONSEI UNIVERSITY User Welfare Decrease of User Welfare? “Some users cannot consume data because they are economically unstable, or live in rural area” 4/24

5. RAdio resource Management and Optimization YONSEI UNIVERSITY Players in Network Service NSPs NetworksUsers Investment QoS Demand Price Revenue Regulator Regulation Cournot Competition (Capacity) Bertrand Competition (Price) 5/24

6. RAdio resource Management and Optimization YONSEI UNIVERSITY Two Subsidy Schemes Price Subsidy Scheme – The regulator gives an equal price subsidy to each user that accesses 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 network service provider (NSP) for free in return for providing a predefined QoS level to users without any charge. 6/24

7. RAdio resource Management and Optimization YONSEI UNIVERSITY System Model 7/24

8. RAdio resource Management and Optimization YONSEI UNIVERSITY 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). 8/24

9. RAdio resource Management and Optimization YONSEI UNIVERSITY Mathematical Notations 9/24

10. RAdio resource Management and Optimization YONSEI UNIVERSITY User Type and QoS Modeling (J. Walrand) Price ≤ User Type ≤ QoS 10/24

11. RAdio resource Management and Optimization YONSEI UNIVERSITY User Demand 11/24

12. RAdio resource Management and Optimization YONSEI UNIVERSITY Price and QoS conditions User Type, Demand, Service Price and QoS 12/24

13. RAdio resource Management and Optimization YONSEI UNIVERSITY NSP’s Profit Maximization Problem 13/24

14. RAdio resource Management and Optimization YONSEI UNIVERSITY Comparison 14/24

15. RAdio resource Management and Optimization YONSEI UNIVERSITY Optimal Solution Conventional Scheme Price Subsidy Scheme QoS Subsidy Scheme 15/24

16. RAdio resource Management and Optimization YONSEI UNIVERSITY Conventional- vs. Price Subsidy Scheme (1/3) Maximal Spectrum Usage 16/24

17. RAdio resource Management and Optimization YONSEI UNIVERSITY Conventional- vs. Price Subsidy Scheme (2/3) 17/24

18. RAdio resource Management and Optimization YONSEI UNIVERSITY Conventional- vs. Price Subsidy Scheme (3/3) 18/24

19. RAdio resource Management and Optimization YONSEI UNIVERSITY Price- vs. QoS Subsidy 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. 19/24

20. RAdio resource Management and Optimization YONSEI UNIVERSITY Discussion 20/24

21. RAdio resource Management and Optimization YONSEI UNIVERSITY 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 spectrum, 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. 21/24

22. RAdio resource Management and Optimization YONSEI UNIVERSITY 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 predefined QoS level for free. At the same time, the regulator gives a price subsidy to users from the spectrum sales revenue. 22/24

23. RAdio resource Management and Optimization YONSEI UNIVERSITY Q&A 23/24

24. RAdio resource Management and Optimization YONSEI UNIVERSITY 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,” Proceedings of IEEE GLOBECOM, 2011. 3.S. M. Yu and S.-L. Kim, “Two-Stage Competition, Pricing and Regulation in Communication Networks,” submitted for publication. 4.R. N. Clarke, “Costs of neutral/unmanaged IP networks,” Review of Network Economics, vol. 8, no. 1, pp. 5, 2009. 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 allocations,” 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. 24/24