The Economic Effects of Sharing Femtocells

The surest way to increase the system capacity of a wireless link is by getting the transmitter and receiver closer to each other, which creates the dual benefits of higher quality links and more spatial reuse. In a network with nomadic users, this inevitably involves deploying more infrastructure, typically in the form of microcells, hotspots, distributed antennas, or relays. A less expensive alternative is the recent concept of femtocells, also called home base-stations, which are data access points installed by home users get better indoor voice and data coverage. In this article, we overview the technical and business arguments for femtocells, and describe the state-of-the-art on each front. We also describe the technical challenges facing femtocell networks, and give some preliminary ideas for how to overcome them.

In a two tier cellular network -- comprised of a central macrocell underlaid with shorter range femtocell hotspots -- cross-tier interference limits overall capacity with universal frequency reuse. To quantify near-far effects with universal frequency reuse, this paper derives a fundamental relation providing the largest feasible cellular Signal-to-Interference-Plus-Noise Ratio (SINR), given any set of feasible femtocell SINRs. We provide a link budget analysis which enables simple and accurate performance insights in a two-tier network. A distributed utility-based SINR adaptation at femtocells is proposed in order to alleviate cross-tier interference at the macrocell from cochannel femtocells. The Foschini-Miljanic (FM) algorithm is a special case of the adaptation. Each femtocell maximizes their individual utility consisting of a SINR based reward less an incurred cost (interference to the macrocell). Numerical results show greater than 30% improvement in mean femtocell SINRs relative to FM. In the event that cross-tier interference prevents a cellular user from obtaining its SINR target, an algorithm is proposed that reduces transmission powers of the strongest femtocell interferers. The algorithm ensures that a cellular user achieves its SINR target even with 100 femtocells/cell-site, and requires a worst case SINR reduction of only 16% at femtocells. These results motivate design of power control schemes requiring minimal network overhead in two-tier networks with shared spectrum.