LANGUAGE English SOURCE IEEE Trans. Wireless Commun., Vol. 15, No. 8, pp. 5681-5694, Aug. 2016 Published Date:Oct. 2016 ABSTRACT Cloud radio access network (C-RAN) was proposed recently to reduce network cost, enable cooperative communications, and increase system flexibility through centralized baseband processing. By pooling multiple virtual base stations (VBSs) and consolidating their stochastic computational tasks, the overall computational resource can be reduced, achieving the so-called statistical multiplexing gain. In this paper, we evaluate the statistical multiplexing gain of VBS pools using a multi-dimensional Markov model, which captures the session-level dynamics and the constraints imposed by both radio and computational resources. Based on this model, we derive a recursive formula for the blocking probability and also a closed-form approximation for it in large pools. These formulas are then used to derive the session-level statistical multiplexing gain of both real-time and delay-tolerant traffic. Numerical results show that VBS pools can achieve more than 75% of the maximum pooling gain with 50 VBSs, but further convergence to the upper bound (largepool limit) is slow because of the quickly diminishing marginal pooling gain, which is inversely proportional to a factor between the one-half and three-fourth power of the pool size. We also find that the pooling gain is more evident under light traffic load and stringent quality of service requirement.