Trading wireless capacity through spectrum virtualization using LTE-A

Markets for spectrum were first proposed by Ronald Coase [1] as a way to efficiently allocate this resource. It took another forty years for primary markets to be developed (in the form of spectrum auctions) as the mechanism for assigning spectrum licenses to users. It is not a secret that secondary markets would be necessary to fully realize the benefits of economic allocation of spectrum. But this is easier said than done, since spectrum is a complex, multi-dimensional product with relatively few buyers and sellers (at least for commercial mobile services), so liquid secondary markets have not emerged, even though spectrum trading through brokers is commonplace. In this paper, we find that liquidity for spectrum markets can be improved over “naked” spectrum markets [2, 3] when a standardized commodity can be traded that uses the principles of spectrum virtualization [4]. We utilize the Physical Resource Blocks (PRBs) of LTE-Advanced as the traded commodity and modify the SPECTRAD model developed in [5] accordingly. Though much remains to be done, we find that this is a promising approach to finally realizing liquid secondary markets in radio spectrum.