Investment and Competition with Shared Spectrum

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Meeting the exploding demand for wireless data services will require access to new wireless spectrum. However, the traditional approach of clearing spectrum and reallocating is becoming increasingly difficult. This in turn has led to much interest in new approaches for sharing spectrum among different users, such as the those being currently developed in the 3.5 GHz band. These approaches raise not only technical challenges but also can fundamentally change the economic interactions among wireless service providers. In this thesis we consider such effects by developing various models for investment and competition with shared spectrum. In these models users select service providers based on the sum of a congestion cost and the provider's announced price. The congestion cost in turn depends on how spectrum is shared; here, we consider a number of different sharing approaches including licensed access, unlicensed access and primary-secondary sharing. In addition to effecting how providers price their service, different sharing rules also impact a provider's incentive to invest in their network. We study this by considering two-stage games in which providers first invest and them compete via price. In addition to different sharing rules, we also consider how differences in information impact a providers investment choices. The congestion costs in these models represents a negative externality among users of spectrum. We also briefly consider similar models with positive externalities motivated by on-demand wireless networking technologies. For each of the models considered, we characterize the corresponding market equilibria and use this to show how different market structures impact the results economic welfare of service providers and end-users. In a number of cases our analysis reveals counter-intuitive results, such as the more open access to spectrum may not lead to greater investment or improved welfare.

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  • 02/13/2018
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