Incentivizing Secondary Spectrum Trading: A Profit Perspective

For concepts such as dynamic spectrum access/sharing and secondary spectrum markets to work, two issues must be adequately addressed: sensing and pricing. The first refers to the ability of a device to accurately detect channel opportunity. The second refers to mechanisms that provide license holders with the right incentives so that they will willingly allow access by unlicensed devices. For the sensing issue, we propose a spectrum utilization model which uses stochastic differential equations (SDE) to model dynamic scattering and multipath fading channels. The SDE model can generate spectrum dynamics as a temporal process, and is shown to provide very good fit for real spectrum measurement data. For the pricing issue, we formulate a contract design problem where a primary license holder wishes to profit from its excess spectrum capacity by selling it to secondary users. It needs to determine how to optimally price the excess spectrum so as to maximize its profit. When multiple primary holders exist, we formulate a price competition model for the primary licensees selling on a secondary spectrum market. We introduce a regulator which can also be thought of as the sellers forming a coalition. We show that by proper design of the transfer mechanism, efficient equilibrium can be achieved.