Game-theoretic analysis of competition between access service providers utilizing a Nash genetic algorithm

Abstract

AbstractFiber-to-the-home (FTTH) technology is a promising solution for providing advanced service delivery to end-users, but its implementation requires substantial capital expenditures. To minimize investment risks and aid decision-making for access service providers, we propose a game theoretic framework based on a modified Nash genetic algorithm. We illustrate how this framework can be applied to analyze the competition between access providers offering a flat-rate FTTH service on multiple geographical areas. Each provider determines its price for all areas simultaneously and decides whether to invest on a particular area depending on the anticipated revenues. Two distinct demand models are adopted to describe different types of consumer behavior. A solution engine, based on a modified mixed-variable Nash genetic algorithm is implemented under an open-source license. The significance and practical implications of the equilibrium points obtained for both single and multiple area games are discussed. The proposed framework and the solution engine developed, aid both providers and regulatory bodies to analyze competitive environments. They can also be used to implement decision support tools for similar problems as well. The paper concludes by pointing out further research directions in this context.