Technology Choices and Pricing Policies in Wireless Networks

This paper studies the provision of a wireless network by a monopolistic provider who may be either benevolent (seeking to maximize social welfare) or selfish (seeking to maximize provider profit). The paper addresses the following questions: Under what circumstances is it feasible for a provider, either benevolent or selfish, to operate a network in such a way as to cover costs? How is the optimal behavior of a benevolent provider different from the optimal behavior of a selfish provider, and how does this difference affect social welfare? And, most importantly, how does the medium access control (MAC) technology influence the answers to these questions? To address these questions, we build a general model, and provide analysis and simulations for simplified but typical scenarios; the focus in these scenarios is on the contrast between the outcomes obtained under carrier-sensing multiple access (CSMA) and outcomes obtained under time-division multiple access (TDMA). Simulation results demonstrate that differences in MAC technology can have a significant effect on social welfare, on provider profit, and even on the (financial) feasibility of a wireless network.