An Economic Analysis of 5G Network Slicing and the Impact of Regulation

Network slicing is a key component of 5G-and-beyond networks, requiring to define a business model for resource allocation. We consider a model with a Service Provider (SP) that may purchase a slice in a wireless network, in order to offer a “premium” service where the improved quality stems from higher prices leading to less demand and less congestion than the basic service offered by the network owner, a scheme known as Paris Metro Pricing. One optimization problem for the SP is the choice of how much resource to allocate to that slice. We also compare with the case of a unique “pipe” (no premium service) and with the case of vertical integration to evaluate the impact of slicing on all actors and identify the “best” economic scenario.