The impact of additional unlicensed spectrum on wireless services competition

The FCC in the U.S. has recently increased the amount of spectrum available for wireless broadband data services by permitting unlicensed access to television white-spaces. While this additional unlicensed spectrum allows for market expansion, it also influences competition among providers and can increase congestion (interference) among consumers of wireless services. We study the value (social welfare) obtained by adding unlicensed spectrum to an existing allocation of licensed spectrum among incumbent Service Providers (SPs). We assume a population of customers who choose a provider based on minimum delivered price. Here, delivered price is the price of the service plus a congestion cost, which depends on the number of subscribers in a band. For the model considered, we find that the social welfare depends on the amount of additional unlicensed spectrum, and can actually decrease over a significant range of unlicensed bandwidths.