A method and a communication system including femtocells within a macrocell efficiently manage interference between the different femtocells, and between each femtocell and a macrocell. An efficient frequency assignment scheme for the femtocells minimizes interference between a femtocell and a macrocell and among different femtocells using a spectrum-sensing technique carried out by the femtocells. The frequency assignment scheme selects a suitable channel from a set of candidate channels and ensures that the femtocell has an acceptable coverage area even when it is close to the macrocell base station (BS). The frequency assignment scheme favors a co-channel implementation to take advantage of the hand-off and cell search characteristics of the co-channel implementation. In one embodiment, a joint power control and frequency band assignment technique is used, which partitions the coverage area of the macrocell into an inner region, a power control region, and an outer region. Depending on a femtocell's location, it is assigned a certain power level and a frequency band. Power control may be used within the power-control region while, in the other regions, a fixed transmission power may be used.