Dynamic Spectrum Auction in Wireless Communication

Spectrums are indispensable resources for wireless communication. Propelled by the rapid development of smart devices and 4G technology, the demand for wireless traffic increases exponentially. In 2010, users worldwide downloaded 5 billion mobile applications, 15 times more than the figure (300 million) in 2009. In the U.S., the number of subscribers to mobile services increased by 20 million in 2011 alone, amounting to 294 million. Such a demand will surpass the capacity of allocated wireless spectrums for mobile broadband services by as soon as 2013. To deal with this problem, on the one hand, the regulators are releasing more spectrums for commercial use; on the other hand, secondary spectrum markets emerge where incumbent spectrum licensees lease their spectrums to other service providers. In 2010, the Federal Communications Commission (FCC) in the U.S. decided to make 500 MHz of new wireless spectrum available within ten years. In July 2012, the President’s Council of Advisors on Science and Technology (PCAST) of the U.S. further proposed to identify 1000 MHz of federal spectrum for commercial use. In 2010, the FCC introduced the idea of incentive auction to encourage incumbent spectrum licensees to voluntarily give up their license and get part of the revenue from re-selling their spectrums. Company Spectrum\(^{\textregistered}\) Bridge has launched an online platform called SpecEx for spectrum owners to sell their unused spectrums to potential buyers. Spectrum auction can be an efficient way to reallocate these spectrums, either from the regulators to the wireless service providers or from incumbent spectrum licensees to secondary service providers.

In this chapter, we will introduce static homogeneous spectrum auction, first in forward auction format, then in double auction format. The key of the auction design is to leverage spectrum reusability while guaranteeing economic properties.

Existing works on double spectrum auction mostly treat spectrums as identical commodities with homogeneous attributes [13, 72], which is acceptable when a small number of spectrums are considered. However, with the forthcoming freeing-up of large pool of spectrums, especially the ones used in TV service that have wide range frequencies, the homogeneous spectrum auction will suffer from severe utilization loss and interference problems.

Static spectrum auction, when applied to dynamic spectrum allocation, will cause potential utility loss. For example, in Fig. 4.1, suppose that buyer A arrives at the first time stage, requesting for 3 time slots, and his true valuation is 1 per time slot. Later at the second time stage, buyer B and buyer C arrive, each requesting for 2 time slots, and their true valuations are both 1 per time slots. If the auctioneer allocates the spectrum to buyer A at the first time stage, buyer A gets utility of 3. However, if the auctioneer rejects buyer A in the first time stage and allocates the spectrum to buyer B and C simultaneously at the second time stage, they get a total utility of 4. Although the spectrum is idle in the first time stage, overall, the spectrum utilization of the second option is higher.

While there is still need for better spectrum auction mechanisms that can efficiently increase spectrum utilization and maintain nice economic properties, researchers start to pay attention other problems in auction, such as collusion. Although the collusion problem has been studied for homogeneous static spectrum auction, it is not sure whether dynamic spectrum auction and spectrum heterogeneity will raise new challenges, and how to deal with such challenges remains an open issue. In this chapter, we will discuss some possible research directions in the future.