Typically the cost of a product, a good or a service has many components.
Those components come from different complex steps in the supply chain of the
product from sourcing to distribution. This economic point of view also takes
place in the determination of goods and services in wireless networks. Indeed,
before transmitting customer data, a network operator has to lease some
frequency range from a spectrum owner and also has to establish agreements with
electricity suppliers. The goal of this paper is to compare two pricing
schemes, namely a power-based and a flat rate, and give a possible explanation
why flat rate pricing schemes are more common than power based pricing ones in
a deregulated wireless market. We suggest a hierarchical game-theoretical model
of a three level supply chain: the end users, the service provider and the
spectrum owner. The end users intend to transmit data on a wireless network.
The amount of traffic sent by the end users depends on the available frequency
bandwidth as well as the price they have to pay for their transmission. A
natural question arises for the service provider: how to design an efficient
pricing scheme in order to maximize his profit. Moreover he has to take into
account the lease charge he has to pay to the spectrum owner and how many
frequency bandwidth to rent. The spectrum owner itself also looks for
maximizing its profit and has to determine the lease price to the service
provider. The equilibrium at each level of our supply chain model are
established and several properties are investigated. In particular, in the case
of a power-based pricing scheme, the service provider and the spectrum owner
tend to share the gross provider profit. Whereas, considering the flat rate
pricing scheme, if the end users are going to exploit the network intensively,
then the tariffs of the suppliers (spectrum owner and service provider)
explode.Comment: This is the last draft version of the paper. Revised version of the
paper accepted by ValueTools 2013 can be found in Proceedings of the 7th
International Conference on Performance Evaluation Methodologies and Tools
(ValueTools '13), December 10-12, 2013, Turin, Ital
