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Monday, January 17, 2011

Cognitive radio networks: RETHINKING SPECTRUM AUCTIONS

Access to the radio spectrum is a key requirement for continuous wireless growth and deployment of new mobile services. Given the fast-growing demand for radio spectrum, regulators around the world are implementing much more flexible and liberal forms of spectrum management, often referred to as dynamic spectrum management. This new model dynamically redistributes and reassigns spectrum within and across different wireless systems, adapting spectrum usage to actual demands and achieving much more efficient use of the precious spectrum resource. Within the new model, two prominent approaches are being considered by the regulators: spectrum trading and cognitive spectrum access. In this article, I focus on examining the challenges in the area of spectrum trading.

Spectrum trading is a market-based approach for spectrum redistribution that enables a spectrum license holder (for example, a cellular operator) to sell or lease all or a portion of its spectrum to a third party. The third party can, in principle, change the use of spectrum or the technology to be used, provided certain conditions are satisfied. Note that this is an important departure from the command and control management model, where spectrum licenses are granted by regulators for the provision of a specific service using a predefined technology and license holders were not allowed to reallocate their spectrum to different technologies or other users. Exposing the radio spectrum to market forces has become increasingly popular.

In the past decade, the radio spectrum has been auctioned in terms of pre-partitioned bulk licenses that cannot match time-varying market demands. Such mismatch led to several consequences. First, forced to bid in the unit of bulk licenses, buyers face huge upfront costs. As a result, past auctions involved only a very few large (incumbent) players, required significant manual negotiations, and often took months or years to conclude. Second, winning buyers that received the licenses could not efficiently utilize the assigned spectrum because their traffic varies significantly in time and space. Finally, while winning buyers’ spectrum sits unused, new entrants and new wireless technologies are either blocked or forced to crowd into highly unreliable unlicensed bands. If not addressed, such inefficiency will soon put a stop to wireless growth and innovation.

Solving such inefficiency requires us to rethink the way the spectrum is distributed, and redesign spectrum auctions to provide networks with spectrum matching their individual demands. Recent works have proposed an eBay-like, open marketplace concept to enable dynamic spectrum trading. In this marketplace, existing spectrum owners (as providers) gain financial returns by leasing their idle spectrum to new spectrum users, and new users (as buyers) obtain the spectrum they desperately need. This marketplace differs significantly from conventional FCC-style spectrum auctions in three aspects:

Multiparty trading with spectrum reuse. Spectrum auctions are fundamentally different from (and much more difficult than) conventional multiunit auctions because of the spectrum’s unique property of reusability. Unlike traditional goods (e.g., paintings, bonds, electricity), the spectrum can be spatially reused concurrently. Although two conflicting bidders must not use the same spectrum bands simultaneously, well-separated bidders can. While a conventional auction with n bidders and k bands can have at most k winners, a spectrum auction can have more than k winners. Therefore, unlike FCC style auctions, which have one provider (i.e., the FCC) and sell one license to only one buyer, the new marketplace supports multiparty trading. Multiple providers can selectively offer their idle spectrum pieces, and each spectrum piece can be sold to multiple “small” buyers. In this way, the new marketplace can exploit spectrum reusability in spatial and temporal domains to improve spectrum usage efficiency.
■ On-demand spectrum trading. Instead of forcing buyers to purchase predefined spectrum licenses, the new marketplace enables buyers to specify their own demands. Given these demands, the marketplace intelligently selects winners and allocates spectrum to best utilize the spectrum offered by providers and supported by buyers. Such flexibility not only attracts a large number of participants, but also enables the system to effectively multiplex spectrum supply and demand, further improving spectrum utilization.
■ Economic robustness with spectrum reuse. Without good economic design, spectrum auctions easily can be manipulated by bidders, suffering huge efficiency loss. Auctioneers are forced to apply Bayesian settings, placing strong (and often wrong) assumptions on the distribution of bidder valuations. The heavy overhead and the vulnerability would easily discourage both providers and players from participation. Therefore, only by preventing market manipulation can an auction attract bidders and new entrants and efficiently distribute spectrum to make the best use of this important resource. While conventional auction design has proposed novel solutions to achieve economic robustness, the requirement on spectrum reuse opens up new vulnerabilities in existing solutions. New auction rules are required to achieve economic robustness while enabling spectrum reuse.

A key spectrum trading challenge arises during on-demand spectrum auction. An on-demand spectrum auction must distribute spectrum on-the-fly to a large number of bidders. Spectrum auctions are multiunit auctions, where the spectrum often is divided into a number of identical channels for sale. Users wish to obtain different amount of spectrum at their desired power levels and may be willing to pay differently depending on the assignment. Toward this goal, we need a compact bidding language to allow buyers to conveniently express their desire and do it so compactly, and an efficient allocation algorithm to distribute spectrum in real-time subject to the complex interference constraints among bidders.

When it comes to resisting market manipulation, the dominant paradigm is truthful auction design. A truthful auction guarantees that, if a bidder bids the true valuation of the resource, its utility will be no less than that when it lies. Hence, the weakly dominating strategy is for a bidder to bid its true valuation.

A truthful auction charges a winner independent of its actual bid, which is different from the auction design in the previous section. To bidders, a truthful auction eliminates the expensive overhead of strategizing about other bidders and prevents market manipulation. Thus, it can attract a wide range of network nodes/establishments to engage in the marketplace. To the auctioneer, by encouraging bidders to reveal their true valuations, a truthful auction can help the auctioneer increase its revenue by assigning the spectrum to the bidders who value it the most. For the same reason, many classic auction systems are made truthful.

While prior works have enforced truthfulness in conventional auctions, existing truthful designs either fail or become computationally prohibitive when applied to spectrum auctions. The fundamental reason is that, unlike goods (e.g., paintings, bonds, electricity) in conventional auctions, the spectrum is reusable among bidders subject to the spatial interference constraints. Because interference is only a local effect, bidders in close proximity cannot use the same spectrum frequency simultaneously, but well-separated bidders can.

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