Contract-based Incentive Mechanism for LTE over Unlicensed Channels

Abstract: In this paper, a novel economic approach, based on the framework of contract theory, is proposed for providing incentives for LTE over unlicensed channels (LTE-U) in cellular-networks. In this model, a mobile network operator (MNO) designs and offers a set of contracts to the users to motivate them to accept being served over the unlicensed bands. A practical model in which the information about the quality-of-service (QoS) required by every user is not known to the MNO and other users, is considered. For this contractual model, the closed-form expression of the price charged by the MNO for every user is derived and the problem of spectrum allocation is formulated as a matching game with incomplete information. For the matching problem, a distributed algorithm is proposed to assign the users to the licensed and unlicensed spectra. Simulation results show that the proposed pricing mechanism can increase the fraction of users that achieve their QoS requirements by up to 45\% compared to classical algorithms that do not account for users requirements. Moreover, the performance of the proposed algorithm in the case of incomplete information is shown to approach the performance of the same mechanism with complete information.