OSP Working Paper #41: Enhancing Spectrum's Value Through Market-informed Congestion Etiquettes

Abstract

This paper evaluates the ability of different wireless spectrum congestion etiquettes to promote the efficient use of wireless spectrum in the presence of licensed and unlicensed operations. Under the examined environment, theory predicts that society leaves half of the value it can receive from spectrum "on the table." One new approach utilizes various types of user information to address the inefficient use problem. The superiority of this new class of etiquette is established both in theory and by experimental results. Assuming a close similarity between the naturally occurring environment and the experimental one, analysis reveals that the average efficiency of the existing etiquette employed in most unlicensed equipment is 42%. In comparison, experimental analysis reveals that the average efficiency of one market-informed etiquette - the Informed Greedy Algorithm - is 70%. These results form the factual basis for generating an entirely new type of spectrum allocation wherein a given band of spectrum is treated as a common pool resource in the absence of excessive spectrum congestion, but is treated as an excludable private good in the presence of such congestion

Keywords: FCC, Spectrum, Unlicensed, Experimental Economics