Abstract: In this paper, we develop a novel inter-cell interference co-ordination scheme that takes into account the interference cost on neighboring cells. We formulate a multi-cell utility maximization problem and subsequently decouple it into single-cell optimization problems by including an interference penalty. By solving this decoupled problem, we derive policies for user selection, resource allocation, and power-control. Since the coupling between cells is indirectly taken into account by means of the user's channel gain to the neighboring cells, our simulation results show that this distributed solution has no degradation in performance while little or no inter-cell co-ordination is required. We present simulation results that show that the Interference Penalty Algorithm (IPA) provides significant improvement in sector and cell-edge throughputs.
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