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In a two tier cellular network - comprised of a central macrocell underlaid with shorter range femtocell hotspots - cross-tier interference limits overall capacity with universal frequency reuse. To quantify near-far effects, this paper derives a fundamental relation providing the largest feasible cellular Signal-to-Interference plus Noise Ratio (SINR), given any set of feasible femtocell SINRs. A distributed utility-based SINR adaptation at femtocells is proposed in order to alleviate cross-tier interference at the macrocell. The Foschini-Miljanic (FM) algorithm is a special case of the adaptation. Each femtocell maximizes their individual utility consisting of a SINR based reward less an incurred cost (cross-tier interference).
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