Demand and pricing effects on the radio resource allocation of multimedia communication systems

Abstract

Over the years, Radio Resource Management has been benchmarked mostly by its technical merits. For a service provider, however, also economics must be reckoned with. When the financial needs of the provider and the satisfaction of the users are considered, common objectives in radio resource man- agement like maximising throughput or meeting various quality constraints, may no longer be sufficient. We analyse next gener- ation communication systems by including models of economics, presented in the literature, and reasonable considerations to de- pict the users/provider relationship in a generalised multimedia environment. In particular, we develop a model of users' sat- isfaction, in which both requested Quality of Service and price paid are taken into account. The model enables us to investi- gate how resource allocation dynamics affect operator revenues and to derive some useful insights. The Radio Resource Manage- ment can be shown to highly depend on economic considerations. The provider's task to determine the best usage of the network ca- pacity is heavily affected by the users' service demand and their reactions to the pricing policy. Thus, the economic scenario needs to be taken into account to efficiently exploit the constrained radio resource. QoS or with (unjustifiably) high QoS at a very high price are likely dissatisfied. Conversely, the provider is not likely to want to sell too cheaply. The total revenue depends on both alloca- tion and pricing policies. Nevertheless, most studies neglect the pricing strategy's effect on user satisfaction. We believe, however, that it is important to also incorporate the economic considerations of the provider in the analysis. As a first contribution, we introduce in this paper a frame- work, preliminarily presented in (4), that we call here Micro- economic Elastic Decentralised User's Service Acceptance (MEDUSA). This model enables us to represent the satisfaction of the users by means of a function describing the user's prob- ability of entering an offered service. The trade-off between paid price and perceived quality is included and this allows a direct evaluation of the revenue. The soft degradation of the users' perceived QoS is described by means of a simple utility function. The tariff for each user can be described as a contin- uous function in a similar way (5). The price is an independent parameter set by the provider 1.