Strategic Network Infrastructure Sharing through Backup Reservation in a Competitive Environment

In transitioning to 5G, the high infrastructure cost, the need for fast rollout of new services, and the frequent technology/system upgrades triggered wireless operators to consider adopting the cost-effective network infrastructure sharing (NIS), even among competitors, to gain technology and market access. To collaborate with competitors, NIS is a bargain whose terms and conditions need to be carefully determined to guarantee profitability in a market with uncertainties. In this work, we propose a strategic NIS framework for contractual backup reservation between a small/local network operator of limited resources and uncertain demands, and one resourceful operator with potentially redundant capacity. The backup reservation agreement requires the local operator (say, operator A) to pay a fixed reservation fee to the resource-owning operator (say, operator B) at fixed time intervals. In return, the operator B guarantees availability of its resource (e.g., spectrum) up to a predetermined level. In such a way, a certain amount of backup resource capacity is reserved for future use under high traffic demand. We characterize the bargaining between the operators in terms of the optimal reservation prices and resource reservation quantities w/o considerations of the competitions between operators in market share. The conditions under which the competitive operators will cooperate are explored. The impacts of competition intensity, redundant capacity, and demand uncertainty on performance under backup reservation are also investigated. Our study shows that NIS through backup reservation leads to both higher resource utilization and profits for operators, as well as higher service levels for end users. We also find that, under certain conditions, operator B will share its resources with operator A even at the risk of impinging on its own users, and the impact of competition intensity on the sharing decisions is highly dependent on the amount of potential redundant capacity.