A bandwidth auction mechanism to enable affordable internet access

Although technological developments have provided momentum to extend the frontier of commercially feasible network deployments, the latest data from ITU regarding affordability of ICT services shows that the digital divide between the rich and poor is still an open issue. Therefore, an economic framework is needed to create conditions for affordable network services. In this paper, we propose a set-aside mechanism that can satisfy this need by reserving resources for targeted groups and resolving the practical problem of having greedy users that rationally compete for cheaper resources. In this mechanism, prices are tailored to users’ budget capacities. Our simulation results indicate that it is possible to increase the resource allocation for delivering services to the poorest by inducing regular users to compete among themselves.