Spectrum markets: motivation, challenges, and implications

Abstract

It is widely recognized that the centralized approach to spectrum management currently used in most countries has led to highly inefficient allocations. It is also recognized that more efficient allocations could be achieved through spectrum markets; however, most discussions have so far focused on secondary markets, which are managed by licensees. Here we take a more expansive view, and discuss some challenges and implications of implementing extensive spectrum markets across locations, time, and diverse sets of applications. The discussion is motivated by first examining the fundamental question: Is spectrum scarce or abundant? Given that spectrum is indeed scarce, and that spectrum property rights are appropriately defined, we speculate on the emergence of a two-tier market; the upper tier consists of spectrum owners that trade spectrum assets analogous to land rights, and the lower tier consists of spot markets for limited-duration rentals of spectrum assets from owners at particular locations. The changes such spectrum markets could bring to the provision of wireless services and wireless network design are discussed along with methods for addressing related interference management issues.