Abstract

The surge of social networking and video streaming on the go has led to the explosion of mobile data traffic. To minimize congestion costs for under-served demand (e.g., Dissatisfied customers, or churn), the cellular service provider is willing to pay WiFi hotspots to serve the demand that exceeds capacity. In the present study, we propose an optimal procurement mechanism with contingent contracts for cellular service providers to leverage the advantages of both cellular and WiFi resources. We show the procedure of computing the optimal procurement mechanism with a tight integration of economics and computational technology. Simulation results show that the proposed procurement mechanism significantly outperforms the standard Vickrey-Clarke-Groves (VCG) auction in terms of the cellular service provider's expected payoff.

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