The Value of Sharing Intermittent Spectrum

Abstract

We examine a model of Cournot competition with congestion motivated by recent policy to allow commercial sharing of wireless spectrum that is assigned to other users such as government agencies. A key feature of such spectrum is that it is intermittently available because of the incumbent user’s activity. In our model, wireless service providers (SPs) compete for a common pool of customers using their own proprietary (exclusively licensed) bands of spectrum along with access to an additional intermittent band. When the intermittent band is unavailable, any traffic carried on that band must be shifted to the proprietary bands. Customers are sensitive to both the price they pay and the average congestion they experience across the bands of spectrum from which they receive service. We compare two different access policies for this intermittent band: one in which it is open to all SPs and one in which it is licensed to a single SP. We also allow the band to be divided into multiple subbands where each subband is either open or licensed. We characterize trade-offs between social welfare and consumer welfare that depend on the choice of different access policies and assignments of subbands to SPs. These can involve subtle issues related to the ability of a larger SP to make more efficient use of intermittent spectrum and the increase in competition by assigning more spectrum to smaller SPs. This paper was accepted by David Simchi-Levi, operations management.