Auction-Based Coopetition between LTE Unlicensed and Wi-Fi (1609.01961v2)

Abstract: Motivated by the recent efforts in extending LTE to the unlicensed spectrum, we propose a novel spectrum sharing framework for the coopetition (i.e., cooperation and competition) between LTE and Wi-Fi in the unlicensed band. Basically, the LTE network can choose to work in one of the two modes: in the competition mode, it randomly accesses an unlicensed channel, and interferes with the Wi-Fi access point using the same channel; in the cooperation mode, it delivers traffic for the Wi-Fi users in exchange for the exclusive access of the corresponding channel. Because the LTE network works in an interference-free manner in the cooperation mode, it can achieve a much larger data rate than that in the competition mode, which allows it to effectively serve both its own users and the Wi-Fi users. We design a second-price reverse auction mechanism, which enables the LTE provider and the Wi-Fi access point owners (APOs) to effectively negotiate the operation mode. Specifically, the LTE provider is the auctioneer (buyer), and the APOs are the bidders (sellers) who compete to sell their channel access opportunities to the LTE provider. In Stage I of the auction, the LTE provider announces a reserve rate. In Stage II of the auction, the APOs submit their bids. We show that the auction involves allocative externalities, i.e., the cooperation between the LTE provider and one APO benefits other APOs who are not directly involved in this cooperation. As a result, a particular APO's willingness to cooperate is affected by its belief about other APOs' willingness to cooperate. This makes our analysis much more challenging than that of the conventional second-price auction, where bidding truthfully is a weakly dominant strategy. We show that the APOs have a unique form of the equilibrium bidding strategies in Stage II, based on which we analyze the LTE provider's optimal reserve rate in Stage I.