Spectrum Auction Research Articles

The German 4G Spectrum Auction: Design and Behaviour

The 2010 German 4G spectrum auction was an unusually large simultaneous ascending multi-band auction. The bidding was competitive and the final assignment was efficient. However, our analysis suggests that independent and rational bidders had an opportunity to coordinate implicitly on a low-revenue outcome. Coordination was difficult, though, because of a multiplicity of focal points. One important focal point involved post-auction negotiations, posing risks to bidders and the auctioneer. We analyse different bidding scenarios and how post-auction negotiations can affect values, bidding and efficiency. We also discuss how the simultaneous ascending auction format can be augmented to mitigate the risks.

Synergistic valuations and efficiency in spectrum auctions

In spectrum auctions, bidders typically have synergistic values for combinations of licenses. This has been the key argument for the use of combinatorial auctions in the recent years. Considering synergistic valuations turns the allocation problem into a computationally hard optimization problem that generally cannot be approximated to a constant factor in polynomial time. Ascending auction designs such as the Simultaneous Multiple Round Auction (SMRA) and the single-stage or two-stage Combinatorial Clock Auction (CCA) can be seen as simple heuristic algorithms to solve this problem. Such heuristics do not necessarily compute the optimal solution, even if bidders are truthful. We study the average efficiency loss that can be attributed to the simplicity of the auction algorithm with different levels of synergies. Our simulations are based on realistic instances of bidder valuations we inferred from bid data from the 2014 Canadian 700 MHz auction. The goal of the paper is not to reproduce the results of the Canadian auction but rather to perform “out-of-sample” counterfactuals comparing SMRA and CCA under different synergy conditions when bidders maximize payoff in each round. With “linear” synergies, a bidder's marginal value for a license grows linearly with the total number of licenses won, while with the “extreme national” synergies, this marginal value is independent of the number of licenses won unless the bidder wins all licenses in a national package. We find that with the extreme national synergy model, the CCA is indeed more efficient than SMRA. However, for the more realistic case of linear synergies, SMRA outperforms various versions of CCA that have been implemented in the field including the one used in the Canadian 700 MHz auction. Overall, the efficiency loss of all ascending auction algorithms is small even with high synergies, which is remarkable given the simplicity of the algorithms.

A spectrum auction algorithm based on joint power control and beamforming in small cell networks

Spectrum auction is considered as a suitable approach to efficiently allocate spectrum among unlicensed users. However, in previous studies of spectrum auction, competition can hardly be reflected in the traditional spectrum allocation and the spectrum efficiency is still not high after the allocation. In this paper, we enhance the factor of competition in the auctions, in which bidders need to pay for the competition and the interference to macro cell users (MUs). We consider a communication system with one macro cell and several small cells, thus a licensed radio spectrum is shared by both MUs and small cell users (SUs). A truthful auction algorithm is proposed for spectrum allocation and the spectrum is divided into multiple channels in different time slots, so that SUs can make their choice for bidding under the guidance of history. In order to raise the communication quality, we propose a power control and beamforming algorithm in the heterogeneous network to enhance the system performance. Simulation results are presented to verify the effectiveness of the proposed algorithm in the small cell network.

WITHDRAWN: Multimodal data analysis and integration for multi-slot spectrum auction based on Deep Feedforward Network

This article has been withdrawn at the request of the editor and publisher. The publisher regrets that an error occurred which led to the premature publication of this paper. This error bears no reflection on the article or its authors. The publisher apologizes to the authors and the readers for this unfortunate error. The full Elsevier Policy on Article Withdrawal can be found at http://www.elsevier.com/locate/withdrawalpolicy .

An adaptive step-size spectrum auction mechanism for two-tier heterogeneous networks

Recently, with the rapid growth of demands for wireless communications, dynamic spectrum allocation is one of the key technologies in cognitive radio networks to resolve the realistic problem of low utilization efficiency of spectrum. It mainly focuses on how the spectrum owner dynamically allocates idle spectrum to secondary users who have no licensed spectrum for communications. In this paper, a dynamic spectrum allocation model based on auction theory in a two-tier heterogeneous network is proposed, in which the primary users (PUs) are the sellers, the central processor (CP) auctioneer is the coordinator, and femtocell base station (FBS) as the buyer bids for the idle spectrum and act as a wireless access point that provides communication services for secondary users (SUs). Its basic process is as follows: the auctioneer gradually raises the spectrum price from the reserved price; each bidder decides whether participates in the purchase or not. It is characterized by distributed execution and low complexity which can reduce unnecessary information exchange between primary users or secondary users. Meanwhile it can enhance the utilization of spectrum and improve the efficiency of the auction by generate the incentive mechanism.

Signaling in Auctions: Experimental Evidence

We study the relative performance of the first-price sealed-bid auction and the second-price sealed-bid auction in a laboratory experiment where bidders can signal information through their bidding behavior to an outside observer. We consider two different information settings: the auctioneer reveals either the identity of the winning bidder only, or she also reveals the winner’s payment to an outside observer. We find that the first-price sealed-bid auction in which the winner’s payment is revealed outperforms the other mechanisms in terms of revenue and efficiency. Our findings may have implications for the design of charity auctions, art auctions, and spectrum auctions.

Robust Large-Scale Spectrum Auctions against False-Name Bids

Auction is a promising approach for dynamic spectrum access in cognitive radio networks. Existing auction mechanisms are mainly strategy-proof to stimulate bidders to reveal their valuations of spectrum truthfully. However, they can suffer significantly from a new cheating pattern, named false-name bids, where a bidder can manipulate the auction by submitting bids under multiple fictitious names. We show such false-name bid cheating is easy to make but difficult to detect in dynamic spectrum auctions. To address this issue, we propose ALETHEIA, a novel flexible, false-name-proof auction framework for large-scale dynamic spectrum access. ALETHEIA not only guarantees strategy-proofness but also resists false-name bids. Moreover, ALETHEIA enables spectrum reuse across a large number of bidders, to improve spectrum utilization. Following that, we extend ALETHEIA to its general version that supports more practical and flexible auction, where bidders accept the spectrum allocation under their partial satisfactions. Theoretical analysis and simulation results show that ALETHEIA achieves both high spectrum redistribution efficiency and auction efficiency.

Exploiting social reciprocity for auction-based spectrum allocation in femtocell networks

With the explosive demand for wireless communications, users are always experiencing poor quality-of-services. Spectrum auction is a promising approach to allocate spectrum resources in wireless networks. Most of the previous works ignored social characteristics of users in wireless networks which influence the allocation of spectrum resources. In this article, we study the spectrum auction problem in a femtocell network and jointly exploit the social reciprocity of users for optimizing the allocation of spectrum resources. We propose an auction incentive framework combined with social reciprocity in the femtocell network. Such a matter is formulated as an integer programming optimization problem, and a modified quantum genetic algorithm is developed to solve the optimization problem. Besides we propose a payment rule satisfying truthfulness and individual rationality properties. Simulation results show that our algorithm can achieve the optimal solution to the optimization problem.

A multi-greedy spectrum auction algorithm for cognitive small cell networks

Cognitive small cell networks consisting of macro- and small cells are foreseen as a candidate solution to meet ever increasing requirements of broadband services and new applications. However, the traditional fixed spectrum allocation policy makes available spectrum resources for small cells insufficient. Therefore, an efficient spectrum allocation method is urgently needed that allows a large number of small cells to share spectrum resources with macro-cells. In this article, a real-time spectrum auction model is presented which aims at assigning the scarce spectrum resources to small cells quickly. The co-win situation is constructed, and the trade-off between spectrum utilization and revenues is controlled. Such a problem is formulated as an NP-hard optimization problem for which a low-complexity multi-greedy algorithm is proposed to obtain prices and spectrum allocations. The proposed algorithm can achieve conflict-free spectrum allocations that maximize the utility and spectrum allocation efficiency. Compared with the Vickrey–Clarke–Groves algorithm, simulation results show the higher utility and spectrum allocation efficiency of the proposed algorithm.

Auctioning the Digital Dividend: A model for spectrum auctions

We model a spectrum auction where firms purchase units to participate in a constrained, multi-product, downstream market. We use dynamic programming techniques to numerically solve for the optimal bidding strategy in a clock auction. Firms value constraining competitor market power, so incumbents often bid aggressively to shut out entrants. We find that high cost firms may hold up the market, so the auction may be inefficient and generate zero revenue. An auction may be optimal for a regulator maximising total surplus. A regulator maximising auction revenue sets reserve prices high enough to restrict spectra sold, effectively behaving as a monopolist.

Auction Design and Auction Outcomes

We study the impact of auction design on the final prices paid by telecommunications operators for the past two decades across the world. Our empirical strategy combines information about competition in the local market, the level of adoption and a wide range of socio-economic indicators. Using a micro dataset of almost every mobile spectrum auction performed so far – both regional and national – we show that auction design affects final prices paid. Two combinations of lot pricing and package rules (SMRA with augmented switching and CCA with core pricing) result in auctions with systematically higher normalized returns. Further, the past history of spectrum awards appears to affect prices paid in subsequent auctions. Previous ownership of commercial lots is linked with higher prices paid per lot which varies across national and regional licences. We discuss the mechanisms of cost minimization and foreclosure faced by operators in different regulatory environments. Our findings have implications for policy-makers and regulators.

Leakage-based beamforming via game theory for reverse spectrum auction in cellular offloading systems

The explosion of mobile traffic and highly dynamic property often make it increasingly stressful for a cellular service provider to provide sufficient cellular spectrum resources to support the dynamic change of traffic demand in a day. In this paper, considering the dynamic characteristic of the cellular network traffic demand, we not only proposed an optimal, truthful reverse auction incentive framework, but also proposed a valuation function which is based on third-party access points’ capacity. We consider spectrum sharing in a third-party network where several secondary users (SUs) share spectrum with a primary user (PU). A leakage-based beamforming algorithm is proposed via game theory to maximize the sum utility of third-party access points subject to the signal-to-leakage-and-noise (SLNR) constraint of SUs and PU interference constraint. The sum throughput maximization problem is formulated as a non-cooperative game, where the SUs compete with each other over the resources. Nash equilibrium is considered as the solution of this game. Simulation results show that the proposed algorithm can achieve a high sum throughput and converge to a locally optimal beamforming vector.

The Devil is in the Details: Lessons from the Indian Spectrum Auctions

The Indian telecom growth as in other countries, largely driven by mobile, saw its teledensity reach nearly 87% by 2016 over a population base of nearly 1.2 bn. As is the trend globally, spectrum has become a critical resource for further growth in the sector, especially with greater demand for data. In India, the initial slow growth was largely attributed to the Department of Telecommunication’s (DoT) design of auctions and the mismatch of the auction outcomes with the market reality. Limited amount of spectrum made available for mobile services and high population densities created a spectrum crunch. Further, given the potential of growth in the market and telecom policies that encouraged competition led to about 10-14 service providers per state creating a further pressure on spectrum. In addition, difficult exit rules and M&A guidelines reduced the scope for consolidation, creating operational and financial pressure for operators. These factors influenced bidding/acquisition of spectrum. From 1995-2010, India largely adopted spectrum auctions other than in 2007-08 when it adopted first-come-first-serve (FCFS) policy for 2G. In 2010, it adopted a sophisticated simultaneous multiple round (SMRA) auctions for 3G. Subsequently, a Supreme Court judgment in 2012 canceled all licenses awarded through FCFS and mandated that all spectrum had to be allocated through auctions. Subsequent auction designs have used SMRA for different bands. The last auction was in 2016. It was a multi-band auction covering 700MHz, 800MHz, 900 MHz, 1800 MHz, 2300 MHz, and 2500 MHz. The 700 MHz band, which is a valued band for 3G and 4G saw no buyers and the 2500 Mhz band which did not have a well developed ecosystem saw significant competition and was allocated. The above raises issues about the efficacy of auction design. While the DoT accepted SMRA as an efficient and effective auction mechanism, it recognized that the specific design elements such as reserve price, withdrawal rules, stopping rules, minimum bid increments have influenced bid outcomes. These parameters needed to incorporate the context of the auction such as requirements of spectrum for different bidders, expectations about future availability, competitor’s bidding strategies, whether single or multiple bands, etc. We plan to document the spectrum auction design, bidder strategies and outcomes, for the auction held in 2016. This auction provides a rich backdrop for the study as it was held in an environment where several prior auctions that had poor outcomes in terms of participation, bid amounts and amount of spectrum made available and new regulations regarding spectrum sharing and trading had become operational. The competitive environment had also changed significantly with possibilities of future M&A. We shall identify the learning from the analysis so as to help with the subsequent auction designs. Such recommendations will also take into account developments in this space in other countries. Methodology: We shall follow the case based approach and document the same using secondary sources of data.

A Prior-Free Spectrum Auction for Approximate Revenue Maximization

A Prior-Free Spectrum Auction for Approximate Revenue Maximization

The First Spectrum Auction in Thailand: Lessons Learned and Achievements

The First Spectrum Auction in Thailand: Lessons Learned and Achievements

Spectrum fees and market performance: A quantitative analysis

This paper aims at providing evidence on the impact of spectrum fees and spectrum availability on mobile operators’ industry revenues by using an original dataset of firms operating in 24 Countries in the period 2005–2014. The analysis quantitatively identifies the relationship between mobile market revenue and their determinants, among which spectrum availability and license fees are included. The analysis provides evidence that spectrum availability and fees are not significantly correlated with mobile industry revenues suggesting that market expectations to extract additional revenues from the mobile service following new spectrum auctions are likely not to be respected.

Quality of service assurance-based auction for spectrum sharing systems

Spectrum sharing has emerged as a promising solution to address the radio frequency spectrum bottleneck. The FCC has recently proposed a spectrum sharing framework that introduces a spectrum access system as the governing entity that manages access to spectrum for primary and secondary users to coexist. An important aspect of dynamic spectrum management is the pricing of spectrum from the perspective of both the primary and secondary users. Existing auction-based spectrum sharing models do not take into consideration an important aspect of successful secondary user operation: the duration of the available spectrum opportunity. In this paper we propose an auction-based spectrum sharing framework that statistically accounts for the accuracy of the estimates of spectrum availability duration. The proposed auctioning process allows both the PU and the SU to iteratively adjust their evaluation about the available spectrum opportunities over time and to achieve a price combination that maximizes their objectives. A method is proposed to statistically assure spectrum availability, supplementing the reporting method. Hidden Markov models and non-stationary hidden Markov models are used to estimate the activity of the spectrum, with simulation results showing high prediction accuracy.

Bargaining in spectrum auctions: A review of the German auction in 2015

Germany was the first country in Europe that auctioned off spectrum in the valuable 700 MHz band for mobile telecommunication usage. The German regulator decided to sell this spectrum together with spectrum in the 900 MHz and 1800 MHz legacy bands. With only the three incumbent operators bidding in the auction and a relatively transparent auction design, it was possible to get a very clear impression of the actual bidding behaviour. We show that in the beginning of the auction, bidders were actively searching for a way to allocate the available spectrum that all bidders could agree to at low prices. Bidders were teaching each other what they should bid and were providing carrots and sticks. When the excess demand was concentrated in one band only, bidders started to compete head on leading to a war of attrition. This competition only stopped when bidders started to raise prices in bands that were already cleared. We interpret this bidding behaviour in terms of bidders expressing allocative externalities and conclude that the ability to do so may be regarded as a positive aspect of the transparent design.

A Question of Scarcity: Spectrum and Canada's Urban Core

AbstractThis article uses a case study of urban Canada to explore the contentious issue of spectrum scarcity. Drawing upon infrastructure studies, this article argues for more critical approaches to this essential element of contemporary communications. The first part of the article explores positions of various actors in the antagonistic debate regarding spectrum scarcity in the lead up to the Canadian 700 MHz spectrum auction, held in 2014. The second part of the article provides unique empirical data for spectrum traffic on licensed frequencies in a busy urban location. The article reaches an unanticipated conclusion that demonstrates shortcomings in current allocation methods.

A Question of Scarcity: Spectrum and Canada's Urban Core

AbstractThis article uses a case study of urban Canada to explore the contentious issue of spectrum scarcity. Drawing upon infrastructure studies, this article argues for more critical approaches to this essential element of contemporary communications. The first part of the article explores positions of various actors in the antagonistic debate regarding spectrum scarcity in the lead up to the Canadian 700 MHz spectrum auction, held in 2014. The second part of the article provides unique empirical data for spectrum traffic on licensed frequencies in a busy urban location. The article reaches an unanticipated conclusion that demonstrates shortcomings in current allocation methods.