Freeriding in Shared Spectrum Markets
Posted: 3 Apr 2017 Last revised: 23 Jun 2017
Date Written: March 31, 2017
Cellular spectrum is a limited natural resource becoming scarcer at a worrisome rate. To satisfy users’ expectation from wireless data services, researchers and practitioners recognized the necessity of more utilization and pervasive sharing of the spectrum. Though scarce, spectrum is underutilized in some areas or within certain operating hours due to the lack of appropriate regulatory policies, static allocation and emerging business challenges. Thus, finding ways to improve the utilization of this resource to make sharing more pervasive is of great importance. There already exists a number of solutions to increase spectrum utilization via increased sharing. Dynamic Spectrum Access (DSA) enables a cellular operator to participate in spectrum sharing in many ways, such as geological database and cognitive radios, but these systems perform spectrum sharing at the secondary level (i.e., the bands are shared if and only if the primary/licensed user is idle) and it is questionable if they will be sufficient to meet the future expectations of the spectral efficiency. Along with the secondary sharing, spectrum sharing among primary users is emerging as a new domain of future mode of pervasive sharing. We call this type of spectrum sharing among primary users as “pervasive spectrum sharing (PSS)”. However, such spectrum sharing among primary users requires strong incentives to share and ensuring a freeriding-free cellular market.
Freeriding in pervasively shared spectrum markets (be it via government incentives/subsidies/regulations or self-motivated coalitions among cellular operators) is a real techno-economic challenge to be addressed. In a PSS market, operators will share their resources with primary users of other operators and may sometimes have to block their own primary users in order to attain sharing goals. Small operators with lower quality service may freeride on large operators’ infrastructure in such pervasively shared markets. Even worse, since small operators’ users may perceive higher-than-expected service quality for a lower fee, this can cause customer loss to the large operators and motivate small operators to continue freeriding with additional earnings from the stolen customers. Thus, freeriding can drive a shared spectrum market to an unhealthy and unstable equilibrium. In this work, we model the freeriding by small operators in shared spectrum markets via a game-theoretic framework. We focus on a performance-based government incentivize scheme and aim to minimize the freeriding issue emerging in such PSS markets. We will present insights from the model and discuss policy and regulatory challenges.
Keywords: Spectrum Sharing, Primary Sharing, Pervasive Sharing, Freeriding, Spectrum Market, Cellular Spectrum
JEL Classification: C72, H11, H12, K23, O38, L19, L59, M15
Suggested Citation: Suggested Citation