A pricing model for a mobile network operator sharing limited resource with a mobile virtual network operator

Abstract

Radio spectrum allocation is essential to the provision of mobile communication services. The spectrum is a finite resource and can accomodate a limited number of simultaneous users at one time. Due to this scarcity, allocating traditional mobile licenses to new mobile operators is unrealizable. Hence, new entrants should bargain access to the networks of the incumbents who establish contracts specifying access charge and maximum traffic volume that the MVNO is allowed to send on the MNO's network. In this article a Mobile Network operator (MNO) shares his finite network resource with a Mobile Virtual Network operator (MVNO) lacking the infrastructure. We study the game where the MVNO invests in content/advertising to compensate for the quality of service degradation. Modeling the system as a supply-chain, i.e. a logistics network consisting of the MNO, the MVNO and the consumers, we determine the access charge and the optimal traffic volume that the MVNO should be allowed to send on the MNO's network to coordinate the system. © Springer-Verlag Berlin Heidelberg 2009.