A pricing mechanism for Femto Base Stations*

We denote by Q the reference area of size Q m2. Our problem is to fully cover the area and to provide certain level of QoS for users. There are two types of Base Stations (BS) that can be used for this purpose. Macro-BSs that have large transmission ranges but their energy consumption is high, and Femto-BSs that have smaller transmission ranges and relatively smaller energy consumption. Telecoms service providers have full control over functionality of Macro-BSs, while Femto-BSs are acting more phazy and are controlled by home service providers. Hence, from the point of view of a service provider, Femto-BSs are unreliable. In practice, the full coverage would be provided by reliable Macro-BSs and Femto-BSs would be mainly used to enhance the level of QoS in the network. As discussed above, telecoms service providers have not control over functionality of Femto-BSs. However, they can motivate home service providers to cooperate with them (e.g. activate their FemtoBSs) by porpoising a reasonable price for service they provide. A home service provider can then evaluate its utility according to the price proposed by the telecoms service provider and decide to cooperate if it gets a positive utility. In this draft, we propose a pricing mechanism and evaluate the behavior of home service providers (i.e., the number of active Femto-BSs) for a given price. We mainly focus our attention on Nash equilibrium analysis.