General Distributed Economic Framework for Dynamic Spectrum Allocation L´ aszl´ o Toka a,∗ , Attila Vid´ acs a a HSN Lab, Dept. of Telecommunications and Media Informatics Budapest University of Technology and Economics Abstract The emergence of novel radio techniques enables the application of advantageous revolutionary spectrum policies. An important body of research has appeared about possible frequency management schemes, but none of them proposes solutions that meet every related criteria. In this paper we present our work on dynamic spectrum allocation and pricing that offers a distributed mechanism design, well-suited to practical employment issues. Our model handles interference effects without any restricting assumptions, provides universal scalable and incentive-compatible allocation and pricing mechanisms. We provide both analytical and numerical evaluation of the proposed framework, and in either case we prove this latter to be a suitable approach to efficient and flexible spectrum utilization. Key words: dynamic spectrum allocation, distributed management, pricing, game theory 1. Introduction Radio spectrum exploitation is historically regulated by governmental authorities (e.g., FCC in USA or ECC in Europe) through static allocation of frequency bands along with rigid specification of the usage parameters (e.g., power, geographical scope) strictly for specific purposes (e.g., broadcast radio/TV, cellular services, wireless LAN). While the growing need for spectrum puts this management scheme’s performance in focus, recent trends in radio technologies allow to replace it with a more dynamic one wherein allocated spectrum amounts may vary in spectral, spatial and temporal dimension, improving spectrum utilization. The currently static frequency allocation regulation results in suboptimal spectrum utilization because of well-known reasons. The capital intensive governmental licenses make the long-term auctioned frequency bands access-limited (i.e., big player syndrome); moreover, the leasers’ peak traffic planning causes temporal * Tel. +36 1 463 1561, Fax. +36 1 463 3107 H-1117 Budapest, Magyar tudosok korutja 2., Hungary Email addresses: toka@tmit.bme.hu (L´ aszl´ o Toka), vidacs@tmit.bme.hu (Attila Vid´ acs) Preprint submitted to Elsevier June 3, 2009