Auction-driven Market Mechanisms for Dynamic Spectrum Management

There is nowadays unanimous agreement that spectrum should be allocated in a dynamic fashion so as to match the stochastic supply and demand by responding to spatiotemporal variations of spectrum availability and request. The imminent liberalization of the spectrum markets is expected to provide more control mechanisms for spectrum exploitation in that respect. Wireless network entities will be able to trade, resell, lease or contribute their resources to a common spectrum pool. In these emerging dynamic spectrum markets there will be many involved entities with diverse and conflicting objectives and hence their success relies on employing proper market-clearing mechanisms. However, designing economicsinspired spectrum management schemes for the dynamic spectrum markets is a challenging task since the objective of the designer is twofold: ensure the socially desirable efficient spectrum utilization and allow interacting entities to accrue monetary or other benefits from participating in these markets. In this chapter, we start by outlining the peculiar characteristics that distinguish the dynamic spectrum markets from other commodity markets and from traditional spectrum markets. We then discuss auction-based mechanisms since they are expected to constitute one of the basic methods for selling spectrum. Auctions are the most suitable market mechanisms for allocating resources when there is limited information about buyers’ valuation for the resource. We analyze the properties of different auction schemes and discuss the challenges in designing such mechanisms for dynamic spectrum markets. We study hierarchical spectrum allocation schemes that are expected to proliferate in these multi-layer markets. Using simple examples it is explained that lack of coordination and the different objectives of the entities in different layers induce an inefficient overall spectrum allocation. We discuss the necessity of devising novel mechanisms that address these issues. Another important aspect of dynamic spectrum markets is that each operator and user will be both a spectrum seller and a spectrum buyer. The existence of multiple dual-role network entities calls for double auction spectrum allocation mechanisms. Unlike typical double auctions, in this case the employed schemes should be lightweight and amenable to decentralized execution. A mechanism that satisfies these requirements is presented. 2 Auction driven market mechanisms for dynamic spectrum management