Optimal Duration of Spectrum Lease
It is widely accepted that the lease duration of spectrum bands sold through auctions plays a crucial role in affecting spectrum utilization. Shorter lease duration increases the frequency of spectrum auctions. Within the scenario studied in this paper, frequent spectrum auctions increases the chances of the spectrum bands being allocated to those operators who can utilize it the best. However, if the lease duration is too short it will not incentivize enough operators to join the market and hence lead to lower competition which in turn deteriorates spectrum utilization. In spite of the importance of lease duration in affecting spectrum utilization, there is no formal study dealing with optimizing the duration of a spectrum lease. This paper presents the first mathematical model to study the effect of lease duration on spectrum utilization under certain market scenario. In such a market scenario, revenue of an operator is the measure of its spectrum utilization. Based on our model, we formulate an optimization problem and develop algorithms to solve the optimization problem for two special cases. Using these algorithms, we numerically study how the optimal characteristics vary with different market parameters.