Unlocking the Potential of QoS-Aware Pricing under the Licensed Shared Access Regime

Abstract: We present a techno-economic analysis of a cellular market that operates under the licensed shared access (LSA) regime, consisting of a mobile network operator (MNO) that leases spectrum to a number of Programme Making and Special Events (PMSE) users. The MNO offers two quality-of-service (QoS) classes (high and low), differentiating the price based on the QoS class. The key question that we address is whether and to which extent the MNO has incentive to adopt this form of QoS-aware pricing. The first step is to model the parameters that are controlled by each PMSE user: i) the way to choose between the two QoS classes and ii) the available budget per QoS class. The second step is to compute the maximum revenue of the MNO. Our analysis reveals that the MNO can always tune the prices so as to maximise its revenue for the scenario where all users belong to the high QoS class. This is a consistent result throughout our study, that holds for any considered set of user-controlled parameters and of technical parameters. We conclude that the adoption of QoS-aware pricing in the LSA market generates a tussle between the MNO and the regulator. The MNO has incentive to support fewer users but with high QoS and charge them more, which is not aligned with the regulator's goal for social welfare maximisation.