Wireless Network Design: Optimization Models and Solution ...

Chapter 7
Spectrum Auctions
Karla Hoffman
Abstract Most developed countries allocate radio spectrum by auction. The Simultaneous
Ascending Auction (SAA) has proven to work well for this application. Recently,
new designs that allow package bidding have been proposed. These designs
have only been tried in the past few years. We first provide some historical background
regarding the allocation of spectrum, describe the use of the SAA design
and its modifications over the past 15 years, and then highlight the new advances in
combinatorial auction designs and their use for the allocation of spectrum.
7.1 Introduction
Many countries around the world use auctions for the allocation of radio spectrum.
In order to understand the evolution of auctioning radio spectrum, one must first
begin by explaining what spectrum is and how spectrum had been allocated prior to
its being auctioned. Radio spectrum is the part of the electromagnetic spectrum used
to transmit voice, video and data. It uses frequencies from 3 kHz to 300 GHz. Thus,
it includes spectrum use for radio and TV broadcasts, paging, wireless and satellite
communications, and many other important telecommunication applications. In
general, most countries allocate the rights to use these airwaves as a license to provide
a specific service (e.g. radio broadcast), using a specific portion of the spectrum
band (e.g. the use of the 15MHz of spectrum between 950MHz and 965MHz in a
specified region (e.g. a state, province or nationwide). There can be a number of
restrictions on its use including the strength of the broadcast signal, the assurance
that it does not create interference with adjoining spectrum regions, and other public
service goals such as requiring that the provider be able to reach a certain percent-
Karla Hoffman
George Mason University, Systems Engineering and Operations Research Department, Fairfax,
Virginia 22030, USA, e-mail: khoffman@gmu.edu
J. Kennington et al. (eds.), Wireless Network Design: Optimization Models and Solution
Procedures, International Series in Operations Research and Management Science 158,
DOI 10.1007/978-1-4419-6111-2_7, © Springer Science+Business Media, LLC 2011
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