2264 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO.
3, THIRD QUARTER 2018
Auction Mechanisms for Virtualization in 5G
Cellular Networks: Basics, Trends, and
Open Challenges
Ummy Habiba and Ekram Hossain , Fellow, IEEE
Abstract—Wireless network virtualization (WNV) is consid-
ered as a reliable and effective solution to enhance the capac-
ity and resource utilization in emerging 5G cellular wireless
networks. WNV supports network sharing and multi-tenancy by
allowing application or service providers with limited resources to
lease network resources from mobile network operators. Several
works in the literature surveyed various aspects of resource allo-
cation and network slicing methods to implement virtualization in
wireless networks. In this paper, we focus on economic aspects
of WNV and study auction theory as a fundamental tool for
designing business models for virtualization of wireless networks,
5G cellular networks in particular. Starting with the concept of
WNV in 5G cellular networks, we describe the basic principles
and solution approaches in auction theory for heterogeneous and
multi-commodity scenarios. Subsequently, we review the recent
advances in WNV based on auction models. We conclude by out-
lining the open challenges and future research directions related
to applications of auctions in WNV.
Index Terms—5G cellular, wireless network virtualiza-
tion (WNV), software-defined network (SDN), network func-
tion virtualization (NFV), auction, network slicing, resource
allocation.
I. I NTRODUCTION
HE MOBILE data traffic is increasing exponentially with
T the growth of wireless devices. The emergence of various
types of wireless services such as virtual reality, automated
driving, smart home appliances, smart personal gadgets are
also pushing mobile network operators (MNOs) to upgrade
their networks. The next generation mobile networks (e.g.,
5G and beyond 5G [B5G]) are expected to be flexible and
highly reliable so that the capacity is scaled up to meet user
demands with high data rate and decrease end-to-end latency,
reduce maintenance cost, and provide consistent quality of
experience (QoE).
Developed by the 3GPP, the existing 4G systems have
the all-IP packet based LTE technology. The LTE-Advanced
(LTE-A), which includes LTE release 10 and beyond
(e.g., LTE-Broadcast [LTE-B]), is expected to be the basis
Manuscript received February 26, 2018; accepted February 26, 2018. Date
of publication March 2, 2018; date of current version August 21, 2018. This
work was supported by the Strategic Partnership Grant from the Natural
Sciences and Engineering Research Council of Canada under Grant STPGP
494315. (Corresponding author: Ekram Hossain.)
The authors are with the Department of Electrical and Computer
Engineering, University of Manitoba, Winnipeg, MB R3T 5V6, Canada
(e-mail: habibau@myumanitoba.ca; ekram.hossain@umanitoba.ca).
Digital Object Identifier 10.1109/COMST.2018.2811395
1553-877X  c 2018 IEEE. Personal use is permitted, but republication/redistribution requires IEEE permission.
See http://www.ieee.org/publications_standards/publications/rights/index.html for more information.
for the next generation (i.e., 5G/B5G) cellular networks. The
LTE/LTE-A network architecture has improvised access and
core network known as evolved universal terrestrial radio
access network (E-UTRAN) and evolved packet core (EPC),
respectively [1], [2]. The access network part comprises of the
base stations (BSs) as the evolved nodeBs (eNodeBs) and the
air interface, which provides radio connectivity between the
user equipment (UE) and the BS. The user data packets
are forwarded to the Internet via serving gateway (SGW),
packet data network gateway (PGW) components in EPC.
The mobility management entity (MME) in EPC network
manages all the signaling and control messages to provide
end-to-end connectivity along with the home subscriber server
(HSS), and policy control and charging rule functions (PCRF)
components.
From network management perspective, the static and
hardware-based platform in the existing LTE/LTE-A technol-
ogy suffers from scalability and flexibility due to coupled
design of control and data planes. Therefore, the existing cellu-
lar technologies need to be upgraded to support the envisioned
wide range of on-demand services in 5G/B5G networks.
Mobile network operators (MNOs) also require to upgrade
hardware appliances to deploy new services and technologies.
To reduce capital expenditure (CAPEX) and/or operational
expenditure (OPEX), the MNOs or service providers (SPs),
who have limited radio and infrastructure resources, may
need to share infrastructure and radio resources with other
MNOs or SPs to meet the 5G requirements (Fig. 1). Different
types of technologies which are expected to be used for
5G include massive MIMO, cloud radio access network (C-
RAN), device-to-device (D2D) communication, full-duplex
(FD) communication, and non-orthogonal multiple access
(NOMA) communication.
With network-wide sharing of various infrastructure ele-
ments in the core networks and both infrastructure and radio
resources at the access networks among different virtual
networks (VNs), virtualization can improve the utilization of
the network resources. In fact, WNV creates business oppor-
tunities for infrastructure providers (InPs), SPs, and MNOs
to make profits and provide improved network services by
sharing the network resources. The business entities who par-
ticipate in the virtualization process, choose one of the logical
roles among InP, MVNO, or SP according to the system model
and business requirements. The service providers (SPs) are
the business entities who do not have sufficient infrastructure
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
TABLE I
A LTERNATE S OLUTION A PPROACHES FOR R ESOURCE P ROVISIONING AND P RICING IN WNV
Fig. 1. SDN and NFV-enabled 5G network architecture.
and/or resources to provide wireless services to their sub-
scribed users. Hence, SPs want to purchase infrastructure
and/or resources from other entity known as infrastructure
providers (InPs). The services provided by the SPs include
e-commerce, video, gaming, VOIP, wearable smart devices,
smart home appliances and other IoT devices, virtual reality
or augmented reality, other over-the-top (OTT) services, etc.
In the WNV business model, the MVNOs and SPs represent
the same entity with different roles. SPs accumulate the users’
demand and service requirements and forward the requests to
the MVNO. An MVNO is a virtual entity representing an SP
in the virtualization layer who leases resources from one or
multiple InPs according to the demand requests received from
the SP. On the other hand, the role of an InP is different. It
owns infrastructure and resources, partitions and assigns them
to MVNOs. Therefore, an entity cannot be an InP and MVNO
at the same time. Similarly, an InP and SP cannot be the same
entity. However, an SP can play the role of a virtual InP and
can lease its underutilized or idle resources to other SPs. Thus,
the SPs/MNOs can reduce the cost for deploying new services
and the InPs can earn more revenue by sharing their under-
utilized network resources. SPs are assigned with isolated VN
segments that may consist chunks of different types of infras-
tructure and radio resources across the access and core network
such as spectrum, transmission power, antennas, computational
and storage resources [11]. WNV requires an efficient mech-
anism to partition the network considering different types of
2265
resource chunks, allocate VN segments to SPs and determine
the selling prices in a way that maximizes the utilities of all
of the involved entities. In a wireless environment, the deploy-
ment of VNs should be automated according the time varying
channel conditions. In presence of multiple operators at the
same geographic location, end users and SPs should have the
opportunity to choose the MNO from which it can get the
resource or service at a lower cost. Therefore, the standard
WNV model for 5G or beyond 5G cellular network needs a
market model that guarantees benefits for all entities through
network sharing.
A. Motivation of Using Auctions in WNV
Within the framework of network virtualization, resource
slicing, resource allocation and scheduling, VN mapping, and
other service provisioning problems have been studied in the
literature using game theory, optimization tools as well as
graph theory (as shown in Table I). However, the WNV busi-
ness model, especially in the case of 5G/B5G systems, needs
comprehensive investigations to deploy network sharing and
multi-tenancy in real networks through automated resource or
service provisioning. The trading of network infrastructure and
radio resources can be modeled using microeconomic theory,
optimization, non-cooperative game, bargaining game, and/or
auction approaches. Auction models come as a natural choice
to design resource provisioning and pricing schemes because
of their ability to model interactions among the interested buy-
ers and sellers [12], [13]. These models can be easily adapted
to integrate optimization and game theory tools for analyses
of computational and economic properties. The auction mech-
anisms can support a wide variety of features and can be used
to design the complete business model that jointly optimizes
the resource utilization and revenue maximization with an effi-
cient pricing rule. Auction mechanisms also allow the InPs,
MNOs, SPs, and end users to communicate so that they can
express their individual requirements and agree on a price
acceptable to both seller and buyer ends. The auction mod-
els also enable on-demand real-time service provisioning of
network functions.
2266 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
TABLE II
S UMMARY OF A BBREVIATIONS
B. Scope and Contributions
Despite several existing surveys on WNV [14]–[19], we
aim at reviewing the virtualization models with a new per-
spective in terms of network slicing and pricing based on
auction mechanisms. The existing works survey the research
challenges for resource slicing and implementing the virtual
network slices in SDN/NFV-enabled wireless networks. The
survey in [15] presents an overview of WNV along with a
brief survey of virtualization methods and related research
challenges. In [16], virtualization of wireless links and nodes
is reviewed, whereas [17] particularly focuses on the resource
allocation and isolation problems and provides a review of
existing works on resource slicing in WNV. The implementa-
tion of network sharing and multi-tenancy in WNV, through
SDN hypervisor or the virtual machine monitor, is studied
in [18]. The authors review both centralized and decentral-
ized SDN hypervisors or virtualization controllers that allow
multiple tenant architecture. The software-defined NFV archi-
tecture in [19] studies the flexibility of service deployment by
virtualizing various network functions of hardware appliances
into software applications. An SDN and NFV-based architec-
ture for mobile packet core network is presented in [14] that
focuses on functional implementation and deployment strategy
of the next generation EPC network.
The pricing mechanisms for network infrastructure shar-
ing among multiple tenants in WNV have not been studied
comprehensively in the existing literature. Dynamic pricing
for virtualizing network resources and services will enable
on-demand service provisioning, optimal resource utilization,
and low maintenance cost in 5G/B5G wireless networks.
We, therefore, focus on pricing mechanisms for auction-
based market models for virtualization of network infrastruc-
ture/resources and functionalities, e.g., base stations, antennas,
spectrum, edge computing servers, cache storage, etc. The
main contributions of this paper are as follows:
• We provide an overview of virtualization process in wire-
less networks, the business model and main research
challenges in WNV. We also discuss about the deploy-
ment of WNV techniques in 5G wireless systems using
SDN and NFV technologies.
• We present the fundamentals of auction theory in design-
ing virtualization models for wireless networks with the
aim of achieving efficient network resource utilization as
well as revenue maximization of the MNOs.
• We review the existing auction approaches in virtualiza-
tion of wireless networks.
• We identify open challenges which have not yet been
addressed in the literature and discuss future research
directions.
C. Paper Organization
The rest of the paper is organized as follows. Section II
presents the concepts of network virtualization in wireless
networks, business models including SDN and NFV-based
architecture along with related research challenges. A sum-
mary of abbreviations used in this paper is provided in Table II.
The basic principles and various solution approaches in auc-
tion mechanism design are detailed in Section III. The existing
auction-based virtualization models in wireless networks are
reviewed in Section IV. The lessons learned from different
auction approaches in WNV are discussed in Section V. We
discuss the key open research issues for future investigation
in Section VI. Finally, we conclude the paper in Section VII.
For readers, basic knowledge about wireless communica-
tions, optimization theory and game theory may be required.
To understand the detailed analyses of auction mecha-
nisms, readers may need to be familiar with combinato-
rial optimization theory (e.g., linear programming, knapsack
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
problems), convex optimization theory (e.g., duality), online
learning algorithm (e.g., reinforcement learning).
II. OVERVIEW OF W IRELESS N ETWORK V IRTUALIZATION
WNV is an extension of the network virtualization (NV)
in the context of wireless networks. In this section, we first
explain the concept of NV and its application to wireless
networks. We will outline the business models and research
challenges to implement WNV. The scope of WNV in com-
bination with SDN and NFV to design future 5G network
architecture is then described.
A. Basic Concepts and Motivations for WNV
NV is the process of abstracting and slicing the physical
network resources into virtual networks (VNs). The abstract
representation of the isolated slices is shared among differ-
ent parties or network nodes. The node that has access to a
virtual slice, has the complete control to manage the set of
resources within that slice. In [16], virtualization is defined as
a resource mapping which is comprised of the following prin-
ciples: 1) abstracting physical resources as virtual resources,
2) splitting and combining virtual resources into slices, 3) iso-
lating each of the slices, 4) allocating them simultaneously
among different entities with full ownership within the slice,
and 5) recursive use of the physical resources. The VNs coexist
on the underlaying physical substrate network and indepen-
dently provide services according to the needs of network
nodes. The virtual links are used to map virtual nodes with
substrate nodes. Thus, NV separates the roles of InPs and SPs
and enables network sharing with increased competition and
innovation. The implementation of new services and protocols
does not require installing new hardware or physical nodes.
The VNs allow new applications to be tested on the same
physical infrastructure, but on logically isolated platforms.
This leads to enhanced flexibility, programmability, security,
efficiency, and cost savings.
In wireless networks, the network resources are abstracted
into VN slices and can be isolated according to different types
of spectrum, infrastructure, network and traffic flow. The spec-
trum level virtualization can be considered as an application
of spectrum sharing and dynamic access where the radio spec-
tra are sliced through multiplexing technique and assigned to
different SPs. The infrastructure level virtualization supports
infrastructure sharing among multiple operators by partition-
ing the physical access network elements, e.g., antennas, BSs,
site area, backhaul equipment, and cabinets, etc. The network
level virtualization represents a virtual network consisting of
virtualized BSs and radio resources (e.g., time slots, spectrum,
signal processors). The flow level virtualization involves allo-
cation of a certain virtual network slice based on some service
or data rate requirements.
A complete framework for virtualization provides opera-
tional flexibility and efficiency to model the heterogeneity of
the traffic demands and satisfies the end-to-end service require-
ments. With WNV, differentiated services can be configured on
the same infrastructure without any dependency on dedicated
hardware devices and geographic location. This optimizes the
2267
resource utilization and facilitates faster implementation of
new wireless technologies and services.
B. Issues in WNV
There are several research challenges in modeling the vir-
tualization methods for wireless networks, which include
isolation, resource discovery and allocation, mobility and
network management, and security issues [15]. In this paper,
we briefly outline some of the major challenges that motivate
auction-based virtualization mechanism.
1) Embedding of Virtual Resources: One of the major chal-
lenges in WNV is to decide how resources are assigned
as virtual resources which is referred to as the embedding
problem. The initial task is to identify the resources to be
virtualized by monitoring the state of the physical resources.
Upon receiving the requests for virtual resources, a mapping
is required to match VN requests with available resources.
Finally, an allocation method is required to define how vir-
tual resources will be mapped to VNs and how VNs will
then be assigned onto the physical infrastructure. A business
model will therefore be required to model the mappings and
allocations of network resources and functionalities.
2) Isolating Virtual Networks: A mechanism is also
required to isolate the virtual slices so that virtual networks can
coexist without interfering with each other. There can be differ-
ent levels of isolation, such as at the frequency or sub-channel
level, time-slot level, spatial location level, information or flow
level, network level, and hardware level (antenna, signal pro-
cessors, etc.). Guaranteeing isolation is difficult in wireless
networks due to time varying channel conditions. In addition,
co-tier and cross-tier interferences in heterogeneous wireless
networks make the isolation problem challenging.
3) Migrating Virtual Machines (VMs): The VNs operate
over the VMs which run on physical servers. If the network
planning is changed within the data center, the corresponding
mapping of virtual nodes and links also need to be updated.
For example, a user’s serving base station may change due
to the user’s mobility or in case of any power outage in the
serving base station. Therefore, the VMs associated with the
virtualized BSs that serve such mobile users need migration
from the current computing node to another. In such scenar-
ios, the footprint of VMs needs to be updated in real-time
to guarantee continuity of on-going services and QoS require-
ments. The cost of VM migration depends on the time and the
backhaul resources spent during the migration. Therefore, the
WNV framework should carefully design with the VN embed-
ding process to efficiently manage the assignment of VNs with
the objective of minimizing the VM migration cost.
4) Managing Control Interfaces: In the virtualization envi-
ronment, the end-to-end connectivity is established through
virtual links which are configured using programmable con-
trol interfaces. The signaling and control messages exchanged
between the users in the access network and the core network
components, should be handled considering processing delays
over the virtual links. It is difficult to manage all the interfaces
in a centralized way because it involves handling a large
number of message exchanges between the two end nodes.
2268 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
TABLE III
B USINESS M ODELS FOR AUCTION M ECHANISMS IN WNV
Designing a reliable communication protocol becomes more
complex due to users’ diverse QoS requirements or ser-
vice level agreements as well as heterogeneity of access
technologies.
C. WNV Business Model
WNV provides potential business models to enhance the
current network architecture by enabling network sharing and
multi-tenancy. Virtualization provides more control over the
wireless resources and services as well as additional oppor-
tunity of revenue generation for different business entities.
The key business players of WNV represent different mobile
network operators, wireless service providers, application or
content providers, or business entities who provides the cloud
services (e.g., C-RAN, IaaS, RaaS, edge computing, etc.) in
wireless networks. When these business entities participate in
the virtualization process, they are identified by one of the
following roles:
• Infrastructure Providers (InPs) own the network infras-
tructures and radio resources that include licensed spec-
trum, radio access networks (RANs), backhaul, trans-
mission networks and core networks. Sometimes, the
InP may not own the spectrum resources but still offer
network infrastructure sharing among other parties. The
InP virtualizes the physical network resources and inter-
acts with other business players to manage the network
sharing.
• Service Providers (SPs) are the business entities who
do not have sufficient infrastructure and/or resources
to provide wireless services to their subscribed users.
They want to purchase infrastructure and/or resources
from InPs. SPs accumulate the users’ demand and
service requirements and forward the requests to the
MVNOs. SPs enable services for their subscribed users
over the resources allocated through virtual network
slices. In practice, the wireless services provided by the
SPs include e-commerce, video, gaming, VOIP, wear-
able smart devices, smart home appliances and other
IoT devices, virtual reality or augmented reality, other
over-the-top (OTT) services, etc.
• Mobile Virtual Network Operators (MVNOs) are the vir-
tual entities who manage the virtual resource requests
from SPs and lease resources from one or multiple InPs
according to the demand requests. Then, an MVNO
uses virtualized resource slices for SPs to satisfy their
subscribers’ QoS requirements.
Network virtualization can be applied to different business
scenarios in wireless networks. A summary of business mod-
els considered in auction-based virtualization is provided in
Table III. Multiple InPs can form a common resource pool
by allowing other parties to share their under-utilized spec-
trum and radio resources dynamically. In another scenario, an
operator may share its physical RAN elements only, not the
spectrum resources. The site area and other supporting ele-
ments including antenna frame and transmission equipments
within the RAN can be shared among MVNOs who have
their own spectrum resources. A virtualized common core
network can also be shared among RANs belonging to dif-
ferent operators. In some cases, SPs and MNOs who have
their own spectrum resources and RAN elements but need to
enhance coverage region, can apply virtualization to share their
resources over the different shared regions.
An MVNO always have full control over the slice of
assigned resources which it can further customize as per users’
QoS requirements. For example, an MVNO can play the role
of the controller node that creates the virtual slices and enables
multi-flow transmission for SPs. If a SP has underutilized or
idle resources, then the SP can also play the role of a virtual
InP and can lease its underutilized or idle resources to other
SPs [23]. This will allow SPs to increase resource utiliza-
tion and get additional revenue at the same time. In Table III,
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
Fig. 2. Virtualization of RAN resources.
existing WNV business models used for auction mechanism
design are summarized in terms of entities who own the
resources, bidders/buyers who request for the virtual resources,
and the type of resources. The table also indicates whether the
business model allows dynamic allocation of resources among
the sellers and the buyers.
D. Virtualization in 4G Wireless Networks
In the context of LTE/LTE-A systems, network virtualiza-
tion can be applied to both the E-UTRAN and EPC. In the
traditional LTE system, the air interface between the UE and
eNodeB in RAN enables the UE to attach to the core network.
The UE gets an IP address from the PGW that allows it to
send user data packets to the packet data network (PDN) and
vice versa, through a communication tunnel in the data plane.
Firstly, the UE sends the data packets to the eNodeB through
the air interface and the data packets are then forwarded to
the PGW via the SGW. The data tunnel setup involves vari-
ous authentication and security setup procedures and exchange
of signaling information among the eNodeB, MME, SGW and
PGW in the control plane.
As shown in Fig. 2, the eNodeB or BS in the LTE air
interface can be virtualized to enable the sharing of spectrum
and antenna resources among multiple MVNOs. The virtual-
ization controller entity known as LTE hypervisor takes the
responsibility to partition the physical eNodeB into virtual
BSs (VBSs). The hypervisor can aggregate network resources
from multiple InPs and then virtualize to allocate them to
the MVNOs. The hypervisor schedules the physical resource
blocks (PRBs) among MVNOs by virtualizing the radio spec-
trum resources. The radio spectra can be sliced using the
OFDMA technique and then assigned to VNs. Similarly, trans-
mission power and antenna system can also be sliced in their
smallest units and assigned to VNs in a way that maximizes
total utility. The MVNOs can independently run their own
applications utilizing the allocated resources in the VNs.
Virtualization can also be applied to virtualize the core
network components particularly the MME, SGW, and PGW.
The hardware devices related to the EPC entities such as
2269
Fig. 3. A SDN/NFV-enabled LTE/LTE-A network architecture.
routers, switches, signal processors, and other computing and
storage devices will be virtualized into virtual machines (VMs)
and deployed in the cloud environment. The virtualization
of the core network will enable sharing of the common
core elements by multiple RANs that belong to the differ-
ent MVNOs. The virtualized access and core networks are
separated by the LTE/LTE-A hypervisor which abstracts and
logically partitions them. The interactions among the VMs can
be modeled through open and programmable interfaces based
on SDN protocols and thus the LTE/LTE-A hypervisor can be
implemented as a centralized SDN controller.
Full virtualization of the wireless networks can be achieved
through an NFV framework which supports multi-tenancy
of both network resources and service functions over a sin-
gle physical platform. In the NFV framework, the wireless
network resources and functions offered by different InPs can
be managed by a virtualized resource manager. The applica-
tions and services offered by the SPs or MVNOs and the
control and signaling functions in the core network can be
implemented through virtual network functions (VNFs). And
SDN can be used in defining the programmable network
interfaces for the implementing the VNFs.
Considering a case of network virtualization in LTE/LTE-A
mobile network where multiple RANs from different oper-
ators share the common core infrastructure, SDN and NFV
can be fully utilized in implementing the virtualization. As
depicted in Fig. 3, the SDN controller separates the control and
data planes and provides northbound and southbound applica-
tion programming interfaces (APIs) to enable communication
between these two layers. The C-RAN virtualizes BBUs as
VNFs in data and control planes. The SGW and PGW in
the EPC are partitioned into virtual gateways separately. The
signaling and management events of the virtualized control
plane gateways (SGW-C, PGW-C) and the data plane gate-
ways (SGW-D, PGW-D) are configured as VNFs. The VNFs
are installed as software applications at the VMs in the control
2270 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
plane. Other control entities such as MME are deployed as part
of the SDN controller in the control plane. NFV can also be
applied on SDN controller to virtualize its functional respon-
sibilities as VNFs. The VNFs may form a pool in the cloud
and provide services as per the requirements in the control and
data planes. The applications running on VMs in the control
plane gateways communicate with the SDN controller through
the northbound interface, e.g., JSON-RPC. On the other hand,
the southbound interface based on OpenFlow protocol enables
communication between the virtualized gateway switches and
the SDN controller. The overall functionalities are managed by
the NFV management and orchestration (NFV MANO) node.
E. Virtualization in 5G Networks
The existing 4G network architecture needs to be upgraded
in various perspectives to fulfill the 5G performance require-
ments. The 5G RAN is envisioned to provide diverse services
by operating over a wide range of licensed and unlicensed
spectrum (e.g., mmWave bands) as well as sharing spectrum
through spectrum pool and mutual renting. In order to support
new services and technologies (such as device-to-device [D2D]
communication, IoT and machine-to-machine [M2M] com-
munications, full-duplex [FD] communication, non-orthogonal
multiple access [NOMA]), the RAN should be able to scale
in terms of throughput, the number of devices, and the num-
ber of connections. The data rate and spectral efficiency can be
enhanced by using massive MIMO and mmWave communica-
tions, and the capacity can be boosted further through network
densification and offloading in a heterogeneous network envi-
ronment. The 5G network should provide multi-connectivity
between a device and multiple network nodes. The data and
control planes should support network slicing so that multiple
virtual networks can coexist as independent business opera-
tions on a shared physical infrastructure. The radio spectrum,
infrastructure and transport network resources can be re-used
within the network slices. 5G networks will also support
C-RAN deployment and different types of cloud services
including backhaul and fronthaul. Next, we discuss the role
of NFV in 5G as well as the potential use of auction theory in
the context of WNV. We also discuss how the auction mech-
anisms and NFV-enables services can be implemented using
the SDN in 5G networks.
1) NFV in 5G: In wireless networks, NFV can be imple-
mented to design elastic service provisioning mechanisms for
virtualizing different 5G wireless services. An example of
virtualizing the EPC components through NFV is shown in
Fig. 3 which represents a possible implementation of NFV
in 5G wireless networks. The standard NFV architecture has
three elements: NFV infrastructure (NFVI), VNFs, and NFV
management and orchestration (NFV MANO) [42]. NFVI con-
sists of the physical resources such as computing devices,
storage, signal processing units, and other physical network
components that can be virtualized as VM instances. The VM
instances are implemented as VNFs with well-defined func-
tionalities and necessary external logical interfaces. The VNF
may comprise multiple network components and the function-
alities will then be implemented as a chain of services. The
NFV MANO manages the tasks necessary in the NFV frame-
work which include defining the interfaces for communication
among different components.
The dynamic and elastic nature of the NFV architecture
allow to design virtualization mechanisms that support multi-
tenancy, resource pooling and on-demand service or resource
allocation. In the NFV business model, an InP represents a
resource supplier who manages the physical resources in the
data centers and also wireless infrastructure resources. In the
context of NFV, InPs can be considered as VNF providers. The
SPs lease resources from InPs and use them for running VNFs.
They may also re-sell the resources by taking the role of an
InP. The VNF providers execute the software implementation
for VNFs at the VMs. In some cases, the SPs may need to
interact with multiple VNF providers to provide a single ser-
vice. In such cases a broker is considered in the market model
that manages the interactions among multiple InPs, SPs, and
end users. The end users are like consumers in the market who
demand a wide range of services and SPs are envisioned to
serve them accordingly.
The cloud computing services for a mobile network can also
be virtualized with the help of NFV. In the cloud environment,
the InP manages the cloud computing platform, e.g., VNs,
servers, storage, and services. NFV can be applied to create
a virtual pool of these computing resources and lease them
to cloud users using a multi-tenant model based on usage-
based pricing scheme. The cloud computing service models
are categorized under the everything-as-a-service concept. In
the infrastructure-as-a-service (IaaS) model, users can request
for any processing, storage, and other computing resources.
These infrastructure resources are then virtualized into VNs
and assigned to users according to their demands. This is
often generalized as providing users with network-as-a-service
(NaaS). Similar to IaaS, wireless radio spectrum resources can
also be provisioned as a radio-as-a-service (RaaS).
2) Auctions for Virtualization in 5G: The partitioning and
mapping procedures in WNV can be modeled as an auc-
tion mechanism where the physical network infrastructure
and resources are considered as the items or commodities to
be auctioned. The existing network virtualization models are
mostly static and thus rely on contractual agreements for pric-
ing and charging rules. Moving toward 5G, WNV needs to
incorporate on-demand allocation of wireless services where
operators may purchase resources or capacity for a limited
period of time. In addition, virtualization needs to model
heterogeneous network functionalities. Auction is a powerful
tool which has all the desirable properties to design eco-
nomically efficient mechanisms. Auction mechanisms can be
used to design a virtualization framework to jointly ensure
the allocation and economic efficiency for heterogeneous 5G
systems.
3) SDN in 5G: An SDN-enabled wireless network archi-
tecture offers the ability to virtualize and slice the wire-
less network by separating the control and data planes in
RAN and EPC. The SDN controller acts as the hypervi-
sor to host the network virtualization on a programmable
platform. The hypervisor uses a priori knowledge about wire-
less links and traffic status, users’ QoS requirements, and
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
other service level agreements among InPs and MVNOs.
Therefore, auction-based algorithms for virtualization can run
in the SDN controllers (e.g., in those owned by an InP when
it leases resources to the MVNOs/SPs. SDN also provides
access to different MVNOs and corresponding VNs to use
different radio access technologies (RATs). In addition, the
communication interfaces in NFV architecture can be imple-
mented via SDN controller. The virtual and physical data
plane devices (e.g., gateway switches) are managed via south-
bound interface protocols. The southbound interfaces can be
defined using the OpenFlow protocol which is proposed by
the open networking foundation (ONF). In the context of
wireless and mobile networks, OpenFlow protocol has been
studied in several works. The FlowVisor in [43] is the first
work on SDN-based architecture for network virtualization
enabled via OpenFlow protocol. As an extension to FlowVisor
in the mobile network, CellVisor is proposed in [44] to man-
age and control the resources of the cellular network based on
mobile users’ demands. RadioVisor in [45] presents the vir-
tualization of radio resources in 3D resource grid of space,
time-slots and frequency. MobileVisor architecture in [46]
integrates the FlowVisor functionality into virtualization of
mobile packet core network. The SDN controller interacts
with the network applications running on the control plane
via northbound interface protocols. The northbound interface
between the control plane and the SDN controller has not been
standardized. To exchange data packets between control plane
gateways and the controller node, [47] has used JSON-RPC.
III. F UNDAMENTALS OF AUCTION T HEORY
The pricing models used for wireless networks are often
pre-negotiated among the business entities and payments are
determined according to contractual agreements. Such pricing
models are applied in symmetric and complete informa-
tion scenarios, whereas auctions can be modeled even in
asymmetric and incomplete information scenarios. In wire-
less networks, auctions can be applied to efficiently allo-
cate resources among users and wireless service providers.
By using the auction properties, users and wireless service
providers can achieve required performance guarantee as well
as optimize overall network utility. We refer the readers to
[12] and [13] for a detailed introduction to different auction
models used for resource allocation in wireless systems. For
completeness, we will discuss basic auction concepts and var-
ious aspects of auction mechanism design that are relevant to
WNV.
A. Basic Concepts and Classification of Auctions
An auction is a pricing model to buy and sell items with
undetermined values. An auction process is run by an auction-
eer among a set of players consisting of seller(s) and buyer(s).
A typical auction process is considered to have one seller who
usually plays the role of an auctioneer and offers different
commodities for sale. The interested buyers submit their bids
to the auctioneer. The auctioneer then assigns the commodities
in a way that maximizes the total utilities of the players. In a
typical auction scenario, the auctioneer assigns commodities
2271
to the buyers who value them the most and transfers the
allocation payment to the seller.
An auction model can be categorized in several ways.
A detailed classification of the auction models is presented
in [48]. In this paper, we focus on different types of auctions
that are relevant to WNV.
1) Sealed-Bid Auctions: Most of the auction models in
WNV are sealed-bid auctions where bidders’ valuations are
private information. The self-interested SPs or MVNOs who
are willing to buy or lease network resources evaluate their
preferences based on available network information and pri-
vately submit their bids. The SPs determine the set of their
desired resources and corresponding bid prices without know-
ing the valuations of other buyers.
The sealed-bid auctions are usually implemented with pric-
ing rule of k-th price or the second-price auction. The
sealed-bid second-price auction of a single item is alterna-
tively known as the Vickrey auction where the highest bidder
wins the bid, but pays the second highest bid price [49]. The
pricing mechanism in sealed-bid auction of multiple items
or multiple units is known as generalized Vickrey auction or
Vickrey-Clarke-Groves (VCG) auction [50], [51]. In the VCG
pricing scheme, the payment equals the opportunity cost of
assigning the items to the winning bidder with the objective
of maximizing the social welfare. We will discuss the details
of VCG mechanism design later in this paper.
2) Single-Sided and Double-Sided Auctions: In an auction,
the buyers and sellers participate as the players of a two-sided
game. In single-sided auctions, one side hosts the auction as
the auctioneer and the players of the other side compete with
each other to get the desired resources by submitting bids to
the auctioneer. In WNV, only one entity plays the role of the
auctioneer and there can be multiple users, SPs, or MVNOs
who play as the buyers. If there is a single InP who wants
to sell resources among SPs or user, then the InP hosts the
virtualization as well as auction process is referred to as single-
sided forward auction. The single-sided auction can also occur
in reverse manner where multiple InPs compete by submitting
their ask prices as bids to sell their resources to a single user,
SP, or MVNO.
In case of a double-sided auction, multiple sellers and
multiple buyers participate in the auction and submit their ask
or buy bid prices to the auctioneer respectively. Each player
can behave strategically to set the bidding strategy to win
the ask or buy bid. The optimal allocation is determined by
matching the bid prices submitted by buyers and sellers.
3) Single-Item Auctions: In single-item auctions, the sellers
offer a single type of commodity consisting of one or more
indivisible units. If there is only one unit available, then the
auction is referred to as a single-item single-unit auction. On
the other hand, single-item multiple-unit auction refers to an
auction where bidders can request for multiple units of the
same item. For instance, in the LTE virtualization model, a
service provider may bid for multiple sub-channels required
to satisfy its users’ requirements.
4) Multi-Item Auctions: The auction model with multiple
heterogeneous items is referred to as the multi-item
or combinatorial auction. Bidders can bid for arbitrary
2272 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
combinations of items and express their actual preferences
over the bundles of items considering the complementarities
and substitutabilities among items. The valuation of comple-
mentary items can be represented by a super-additive utility
function, whereas the substitutable items have sub-additive
utility function [52]. The combinatorial auction can also be
categorized as single-unit multi-item and multi-unit multi-item
auctions based on the number of units available for each item.
In wireless networks, virtualization is applied on various
types of resources to share them among different entities
or network nodes. Therefore, combinatorial auctions will be
preferred instead of performing single-item auction multiple
times. Combinatorial auction will also facilitate in express-
ing bids on network resources with complementarities. For
example, sub-channels and power resources complement each
other in network virtualization, and sub-channels with differ-
ent bandwidth can be considered as substitutable items while
virtualizing through a combinatorial auction.
5) Direct and Iterative Auctions: In a direct mechanism,
the auctioneer determines the winning bidders and payments
in one shot based on the bids submitted during the bidding
process. The winner determination is computationally difficult
and NP-hard in case of combinatorial auction. In an iterative
auction, the auctioneer repeats the bidding and allocation pro-
cess until an efficient solution is achieved. The iterative auction
can be designed in different ways. A simple iterative ascend-
ing price auction is presented in [53] where the auctioneer
announces an initial ask price and collects bids at the current
price. The auctioneer then aggregates the demand bids and
assigns an item to a bidder if no other bidder demands the
same item. If there exists any excess demand, i.e., multiple
bidders request the same item, then the auctioneer increases
the ask price of that item and repeats the bidding and allocation
process.
B. Auction as a Game
An auction can be represented as a game with self-interested
players who want to maximize their own payoffs. In an auction
game, sellers or buyers participate as players by submit-
ting bids over a set of commodities. A player valuates each
commodity according to his/her willingness to pay for that
commodity. The player’s actual valuation is private informa-
tion which is not revealed to other players. In the auction
game, bids are considered as strategies where the bid amount
is determined using the player’s private valuation. A player
can bid more or less than the actual valuation. Considering
all possible strategy combinations, the player selects a bid
that maximizes his/her payoff. The outcomes of the auc-
tion game are the winning buyers whose bids are accepted
and the price that the winners pay for allocation of the
commodities.
In an incomplete information scenario, players may have
knowledge about the number of bidders and the distribution of
the valuations of other players. In equilibrium, all bidders play
best responses, i.e., select the bidding strategies in a way that
maximize their expected payoffs. Players determine their best
responses based on their beliefs about other players’ strategies.
Example: Consider, a second-price auction for a single-item
single-unit scenario which can be illustrated as a game. The
payoff of bidder i for bid bi can be represented as
ui (b) = vi − max bj , if i = arg max b (1)
j=i
where vi is the true valuation and maxj=i bj represents the
highest bid without bidder i’s participation. In this game, all
the bidders participate with the objective of maximizing their
own payoffs. Each bidder i would choose a bid value equiva-
lent to its true valuation vi as the dominant strategy, because
the resulting the payoff will always be non-negative. For each
bidder, the true bid b∗i = vi is the Nash equilibrium.
C. Auction Mechanism Design
The WNV model often involves virtualizing heterogeneous
network resources simultaneously (such as sub-channels,
power, antenna, computing and storage hardware, and other
infrastructure resources). In order to model the virtualization
technique efficiently, the combinatorial auction would be a
potential model which allows bidders to submit an arbitrary
number of bids on heterogeneous items according to their pref-
erences. In this section, we discuss both direct and iterative
approaches to design auction mechanism particularly for com-
binatorial auctions in the context of sealed-bid auctions. We
also address the auction design where the bidders need to adapt
their bidding strategies under uncertainties, which is more rel-
evant in the stochastic environments of wireless networks. In
some cases, the MVNOs may not be able to evaluate the exact
achievable user rate and they need to evaluate probabilistically.
1) Auction Design Objectives and Properties: Auctions
have been widely and successfully applied in wireless
networks for computational mechanism design that reconciles
game theoretic and computational properties. One of the main
objectives of auction design is to determine optimal allocation
of items. An efficient allocation represents disjoint assignment
of items to bidders in a way that maximizes the social welfare,
i.e., total valuation of the bidders. This is similar to partition-
ing the network resources in a way that maximizes resource
utilization through WNV. Another objective of auction design
is to maximize the revenue of the sellers with efficient pricing
rule. Therefore, the design of an optimal auction mechanism
needs to handle the trade-off between allocation efficiency
and revenue maximization. An optimal auction is expected
to optimize sellers’ revenue under the constraint that buyers’
welfare meets a minimum threshold.
An auction mechanism involves designing an algorithm to
obtain the allocation outcome along with a pricing rule to
determine the payment prices for the participating bidders.
The auction mechanism is expected to satisfy the following
economic properties [48]:
• Individual rationality: An auction is individual rational
if each player receives a non-negative utility gain. A
winning buyer is charged according to his/her bid price,
not more than the bid. Similarly, a winning seller gets a
maximum reward equivalent to the ask price.
• Efficiency: An allocation in the auction is considered
to be efficient when the sum value of all winning
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
bids is maximized. An auction mechanism is considered
computationally efficient if the auction has a polynomial-
time allocation algorithm. From economic perspective, an
auction is optimal if it maximizes the seller’s revenue.
• Incentive compatibility: An auction mechanism is said
to be incentive compatible or strategy-proof when every
bidder gets the maximum utility by submitting his/her
true valuation over the item(s). The dominant strategy
of truthful bidding ensures that no buyer or seller can
improve his/her utility by submitting any non-truthful bid
or ask prices.
• Budget balance: An auction is budget-balanced when the
auctioneer collects the payments from the winning buy-
ers’ and transfers the same amount to respective seller(s).
This guarantees that there is no deficit for the auctioneer.
2) Issues in Designing Combinatorial Auctions: The stan-
dard auction design involves three procedures: bidding, allo-
cation, and pricing. For single-item auctions, conventional
auction mechanisms such as English auction, Dutch auction,
and Vickrey auction can provide efficient allocation and pric-
ing rules [49], [54]. Combinatorial auctions bring additional
challenges in computing tractable solution as the social welfare
maximizing problem is NP-hard.
• Bidding: The auction determines the bidding rules by
specifying the bid structure, bid language, and strategies
for bid computation. In a simple single-item auction, a
bidder states the amount of money he/she wants to pay
to obtain the item. In case of a combinatorial auction,
a bidder has to evaluate each possible combination of
items that s/he may get. The auction specifies the bid
structure representing the bid size, number of bundles in
each bid, and the attributes in each bundle. The bidding
language provides the syntax and semantics to express
bidders’ preferences over the exponential number of com-
binations in a concise way. There are a number of bidding
languages and valuation models in the combinatorial auc-
tion [55], [56]. The different types of bidding languages
include atomic bids, OR bids, XOR bids, and combination
of OR and XOR bids. The XOR bids are fully expressive
and can represent all valuations. The XOR bids allow
each bidder to submit an arbitrary number of bids and
at most one of the bids will be assigned to the bidder.
The XOR bid representation enables truthful valuation
revelation and leads to economic efficiency and incentive
compatibility using VCG mechanism [55]. For a com-
binatorial auction, a computationally efficient method is
required to determine the bid values. The atomic and
XOR bidding languages are called polynomially inter-
pretable, i.e., there exists a polynomial time algorithm to
compute bid value for a given bid and a subset of items.
However, other bidding languages (such as OR bids) may
not be polynomially interpretable when bids on all possi-
ble combinations are allowed. The problem then becomes
exactly the same optimization problem as allocating a
set of items among different bidders, which is NP-hard.
Therefore, the task of interpreting the bid values is often
left to the auctioneer who solves the allocation problem.
In some cases, the auction process may allow bidders to
2273
compute the bids by themselves in order to save com-
putational time in solving the allocation problem. This
allows bidders to select which items to bid on and to
prioritize combinations which are economically impor-
tant to them. The bid generation problem in the bidder
determined combinatorial auction is NP-hard [57].
• Allocation: The main challenge in designing a combi-
natorial auction mechanism is to find computationally
feasible outcome that maximizes the social welfare (i.e.,
total utility of the winning bidders) while maintaining
the economic properties such as efficiency and strategy-
proofness. In a combinatorial auction, solving the win-
ner determination problem (WDP) corresponding to the
optimal allocation is equivalent to solving an NP-hard
combinatorial optimization problem [48], [58]. There are
several approaches to obtain a computationally efficient
solution to WDP, such as exact or approximate (local)
algorithms based on mathematical programming. We will
discuss different solution approaches in the following sec-
tion. The bidders’ valuation strategies may also affect the
optimal outcome, which needs to be considered in deter-
mining the efficient allocation. The auction model may
adopt a static or dynamic mechanism depending on bid-
ders’ information revelation policies. In the incomplete
information revelation scenario, the dynamic mechanism
allows bidders to bid progressively so that the auctioneer
can solve easier instances of the WDP.
• Pricing: The auction model defines a pricing rule to cal-
culate the price each winner pays for winning the bid.
The definition of payment rule is essential to maintain
the incentive compatibility of the auction and to deter-
mine the sellers’ revenue. The VCG mechanism provides
a strategy-proof pricing rule that motivates bidders for
truthful valuation revelation and ensures that bidders will
have incentives for truthful bidding. The VCG pricing
rule also ensures that no bidder is made worse-off by
participating in the auction. We will present the details
of the VCG mechanism in the following section.
D. VCG Mechanism Design
The classic VCG mechanism is a generalized truthful
auction mechanism for multiple units of homogeneous or
heterogeneous items that provides socially optimal solu-
tion [49]–[51]. In a non-cooperative environment of auction
mechanism, each bidder has privately known valuation and
wants to maximize his/her own utility. The self-interested bid-
ders do not necessarily act as instructed by the auctioneer. The
strategy-proof VCG mechanism provides bidders with incen-
tives for submitting their true valuations as the bid prices and
guarantees that bidders get benefits from their participation.
The truthful or strategy-proof VCG also satisfies individual
rationality where the winners pay a discounted price which
is equivalent to their contribution to total social welfare. We
will discuss VCG auction-based virtualization models in the
later sections. In the VCG mechanism, allocation outcome is
determined by solving the WDP. We will discuss different
approaches for solving WDP in Section III-E.
2274 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018

1) VCG Pricing Rule: Consider a single-unit multi-item

auction of M = {1, 2, . . . , m} items and N = {1, 2, . . . , n}
bidders. The allocation variable xi (S) represents the allocation
of the subset of items S ⊆ M to the bidder i ∈ N. Since there
is total m units of items, at most m number bidders can win
the bids. The true bid submitted by bidder i on the subset S is
vi (S). The optimal social welfare obtained from WDP solution
Fig. 4. An example of XOR bids submitted in VCG auction.
can be represented as

V = max vi (S)xi (S)
xi (S)
i∈N S⊆M
 
s.t. xi (S) ≤ 1, ∀ j ∈ M
i∈N S⊆M,j∈S

xi (S) ≤ 1, ∀i ∈ N
S⊆M
xi (S) ∈ {0, 1}, ∀i ∈ N (2) Fig. 5. An example of bids submitted in VCG auction with zero payment.
where every bidder is constrained to get at most one subset of
items where each item is not assigned to more than one bid-
der. The winners are chosen from the tractable WDP solution. 2) Limitations VCG Mechanism: The VCG mechanism
The payment rule in VCG mechanism is based on the second becomes computationally infeasible where WDP is intractable.
highest bid which guarantees that winning bidder pays less In such situations, a VCG-based mechanism is designed with
than his/her submitted bid. The VCG payment for bidder i is sub-optimal allocation and VCG payment. However, in those
calculated by taking the difference between the optimal wel- cases, the VCG-based mechanism is not guaranteed to be
fare when i is not participating, i.e., V −i and the welfare of incentive compatible. To design a computationally feasible
other players in the optimal allocation xi∗ (S) obtained from (2). VCG mechanism, the allocation of VCG can be modified
Thus, with the second chance of submitting an appeal function as
⎡ ⎤
proposed in [59].

pVCG
i = V −i − ⎣V − vi (S)xi∗ (S)⎦ (3) In some cases, the VCG price may not be in the competi-
S⊆M tive equilibrium (CE),1 i.e., the allocation prices that maximize
bidders’ payoff may not be efficient from the seller’s perspec-
where the optimal welfare without bidder i’s participation is
tive. The VCG mechanism provides the buyers with incentives
given by
  in payments for truthful bidding. VCG is thus sometimes
V −i = max vi (S)xi (S) called the minimum-revenue auction. The VCG payments can
xi (S)
i ∈N\i S⊆M be too low and lead to low seller revenue. Fig. 5 shows such
 
s.t. xi (S) ≤ 1, ∀ j ∈ M a bidding scenario in a VCG auction where bidder 1 and 2
i ∈N\i S⊆M,j∈S
win the auction for their bids on item B and item A, respec-
 tively. However, the VCG payments for bidder 1 and 2 are
xi (S) ≤ 1, i ∈ N\i obtained as zero and the net payments of winners is zero
S⊆M which results in null revenue. To enforce minimum and max-
xi (S) ∈ {0, 1}, ∀i ∈ N\i. (4) imum bid prices and to avoid zero payments, reserve prices
The seller’s revenue is determined as the total amount can be used. The revenue maximizing optimal auction mecha-
received by the auctioneer or the seller. nism can be designed based on the Myerson’s characterization
As an example, Fig. 4 shows the XOR bids submitted in a of [60], which we will discuss in Section III-G.
single-unit combinatorial auction where three buyers bid over The general VCG mechanism requires an exponential
two items. In this case, there are total two items with single amount of information to calculate 2m − 1 nonempty com-
unit for each item of items and thus at most two bids can win. binations of m items. To prevent the infeasible outcome, an
The combination of bids that gives the maximum valuation is iterative variant of VCG can be explored which can lower
chosen as the winning bids. Here, bidder 1 and bidder 3 will the computational cost of bid generation. The exponential
be the winners for their bids on item A and item B, respec- information exchange can also be reduced by preference elic-
tively, because their bid combination provides the maximum itation techniques, i.e., by learning bidders’ preferences over
bid valuation of 20+15 = 35. The payment of bidder 1 will be items [61].
calculated according to (3) as the difference between optimal The VCG mechanism is not always budget-balanced, i.e.,
welfare without i’s participation and welfare of other winners the auctioneer may have deficit. The budget constraints in
in the chosen outcome. Therefore, bidder 1’s payment will be VCG auction may encourage bidders to cheat. Moreover,
(pVCG
1 = 34 − (35 − 20) = 19. Similarly, bidder 3 will pay
pVCG
3 = 32 − (35 − 15) = 12. The seller’s revenue will be the 1 Given the final allocation and payment prices, the competitive equilibrium
sum of payments received from the winners, i.e., 19+12 = 31. represents that bidders’ utilities and the auctioneer’s revenue are maximized.
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
with the general valuation2 model, there is no mechanism
which is simultaneously efficient, individual rational, and
budget-balanced, even when budget information is public [62].
E. Solution Approaches for Winner Determination Problem
The main objective of WDP is to obtain the winning
bids. This is a combinatorial optimization problem to deter-
mine a disjoint allocation of items to the bidders such that
the social welfare is maximized. The WDP can be mod-
eled using linear programming (LP), intersection graph, and
network flow models. In this paper, we consider the LP-based
solution approaches and analyze the computational and eco-
nomic properties required to model the heterogeneity of items.
In order to analyze the existing auction-based virtualization
model, we explain the WDP solutions in the context of both
single-sided and double-sided auction models, multiple-item
single-unit and multiple-item multi-unit auctions considering
XOR bidding language.
1) WDP for Single-Unit Combinatorial Auction: We con-
sider a single-sided forward auction model where the seller
hosts an auction to sell multiple single-unit heterogeneous
items among different bidders. Let M = {1, 2, . . . , m} denote
the set of auction commodities and N = {1, 2, . . . , n} is the set
of buyers. Assume each bidder i ∈ N can submit an arbitrary
number of bids Fi . The price that bidder i is willing to pay
for a combination or set of items S ⊆ M is denoted by vi (S)
where vi (S) ∈ Fi . The allocation variable is defined by
 tree structure. In such a setting, bidders are allowed to
1, if bidder i gets S
xi (S) = (5)
0, otherwise
where an allocation is considered feasible if no item is allo-
cated more than once and each bidder gets at most one subset
of items due to XOR bidding. The WDP can be formulated
as the following integer linear program:

n 
max vi (S)xi (S)
xi (S)
i=1 S⊆M
n  and rearranges them in a descending order, the bids can
s.t. xi (S) ≤ 1, ∀ j ∈ M
i=1 S⊆M, j∈S
 obtained by restricting the bid values or preferences. In case
xi (S) ≤ 1, ∀ i ∈ N
S⊆M
xi (S) ∈ {0, 1}, ∀i ∈ N (6)
where the first constraint ensures that every item j in the subset
S ⊆ M is not assigned to more than one buyer. The second
constraint is to restrict that each buyer gets at most one subset
of items. The above WDP formulation is equivalent to the
weighted set packing problem (WSP) which is an NP-hard
problem. The WDP with XOR bidding is NP-complete even
if restrictions are applied on bid values to be equivalent to 1
and size of subsets of bid items is limited to at most 2 [63].
2) Linear Programming Relaxation of WDP: A tractable
solution of WDP can be obtained by using the classic
2 The general valuation for a subset of items S can be defined as: v(S) =
|S|
j=1 pj , where pj is an arbitrary non-negative number that represents the
amount that the bidder is willing to pay for item j [55].
2275
technique of LP-relaxation in combinatorial optimization the-
ory. The integer constraint of the linear program in (6) can be
relaxed by allowing bidders to win any fraction of the bids.
The LP relaxed allocation problem which is referred to as the
fractional combinatorial auction can be expressed as:

n 
max vi (S)xi (S)
xi (S)
i=1 S⊆M
n 
s.t. xi (S) ≤ 1, ∀ j ∈ M
i=1 S⊆M, j∈S

xi (S) ≤ 1, ∀ i ∈ N
S⊆M
xi (S) ≥ 0, ∀i ∈ N (7)
where the constraints ensure that each item is not assigned to
more than one buyer and each buyer gets a subset of items not
more than one. The integer solutions of (7) will provide the
exact solutions of the allocation problem. The exact solution
to the LP-relaxation is guaranteed for bid structures which are
restricted to one of the following cases [55], [64]:
• Linearly ordered bids: When the bids are linearly ordered,
a bidder can only bid on subsets of adjacent items.
However, WDP with XOR bidding restricted to this case
is still NP-hard.
• Hierarchical bids: The LP solution provides an optimal
allocation when the bids form a nested hierarchy or a
submit bids on different combination of items as a pack-
age of bids. In the nested structure, every two subsets of
items can be disjoint or aggregated combination of other
subsets [64].
• Single item bids: In this case, the bidders are restricted
to win only a single item.
• OR-of-XORs of singletons bids: The LP solution provides
an optimal allocation if there is only OR-of-XORs of
singletons bids. If the bidder values all items identically
be represented as OR-of-XORs of singletons bids.
The integral solution to the LP relaxation can also be
of indivisible items, LP-relaxation of WDP with XOR bidding
provides the optimal solution if the goods are substitutive [52].
This restriction would not allow superadditive valuations for
complementarities.
3) Algorithms for Exact Solutions of WDP: The straight-
forward approach to find the exact or optimal WDP solution
is to enumerate all exhaustive partitions where each item is
included in exactly one subset of the partition. However, enu-
merating all partitions would not be a suitable approach unless
the number of items is extremely small.
The enumeration of exhaustive partitions can be per-
formed more efficiently using the dynamic programming
algorithm [64]. The dynamic programming algorithm can be
used to find optimal WDP solution if bids for combinations
are sets of consecutive items. The main idea is to first evaluate
the value of a small subset of items and proceed with larger
ones that maximize the revenue. The main advantage of this
2276 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
algorithm is that it does not repeatedly evaluate the same sub-
set of items. This allows obtaining the solution faster than
exhaustive enumeration. If the items are not well-ordered, the
dynamic programming method may fail to provide the optimal
solution due to an infeasible amount of memory requirements.
There are several commercially available softwares that can
be used to solve the integer program of WDP. A comparison
of different WDP solvers presented in [65] suggests the use
of CPLEX which dominates its predecessors in terms of run
time. The WDP solver named CABOB, which is presented
in [66], is specifically designed for winner determination with
OR bid language and uses the depth-first branch and bound
search strategy. CABOB performs faster than the mixed integer
program solver CPLEX and does not run out of memory. In
order to address the bid generation problem, the eMediator is
proposed in [67] which is suitable for generating XOR and
OR-of-XORs bids.
4) Algorithms for Approximate Solutions of WDP: In case
of combinatorial auctions with large number of bidders and
unrestricted bidding structure, determining exact WDP solu-
tion could be computationally infeasible (i.e., not solvable in
polynomial run-time). An approximate algorithm can be used
to solve WDP and obtain a feasible solution by using heuris-
tic approaches. Two heuristic approaches to solve WDP are as
follows:
(i) Greedy algorithm: The greedy algorithm for LP-
relaxation allows fractional allocation of items. The bids
are ordered in descending order according to the ratio of
bid value and bid size. The items are then sequentially
allocated to the bidder until all items are assigned. The
greedy mechanism with single-minded
√ bids is incentive
compatible and achieves m-approximation for combi-
natorial auctions, where m is the number of items [68].
However, the optimal allocation is not always guaranteed.
(ii) Branch-and-bound algorithm: The main idea of the
branch-and-bound technique is to narrow down the search
space in evaluating bid values. The upper bound is
obtained by using the LP-relaxation solution. The greedy
algorithm provides the lower bound and an initial low
value is chosen as the threshold value. The mechanism
proceeds recursively and the low threshold is updated
according to the greedy algorithm until the optimal allo-
cation is obtained. Although the branch-and-bound tech-
nique provides an optimal outcome, the computational
efficiency is not guaranteed.
The computationally feasible solution of the LP-relaxed
problem is referred to as the optimal fractional solution, as
the resulting social welfare value includes fractional alloca-
tion of items. The optimal fractional objective value of the
LP-relaxed problem is an approximate of the globally opti-
mum social welfare. The approximation ratio can be defined
by a multiplicative factor α which represents the fraction of
optimal welfare achieved using the approximation algorithm.
However, the optimal fractional solution of the LP-relaxed
problem does not necessarily guarantee economic properties
of an auction mechanism design, e.g., incentive compatibility,
individual rationality or budget balance. The following frac-
tional VCG and randomization rounding mechanisms can be
used to ensure truthfulness and individual rationality in the
approximation mechanisms.
5) Truthful Fractional VCG Mechanism: The classic
Vickrey-Clarke-Groves (VCG) mechanism is considered to be
an efficient mechanism where bidders submit their true bids
and the auctioneer finds an optimal allocation by solving the
WDP. The strategy-proof VCG pricing rule can be used for the
fractional LP-relaxed problem. This will assure that bidders’
utilities are maximized for the fractional solutions if they bid
truthfully. This mechanism can be considered as the fractional
VCG mechanism [69]. The optimal fractional social welfare
can be scaled down by an approximation ratio α. Assuming
x∗ as the optimal fractional allocation obtained from (7) the
fractional VCG payment for bidder i can be calculated by:

p∗i = z∗ (b−i ) − bi (x∗ ) (8)
i=i
where z∗ (b−i ) represents the fractional welfare without bid-
der i’s participation and bi (x∗ ) is the other bidder’s marginal
welfare in the optimal fraction allocation x∗ . The fractional
VCG can be considered as a deterministic mechanism since
the allocation prices are always defined based on the VCG
pricing rule where truthful bidding is the dominant strategy
and bidders get non-negative utilities.
6) Randomized Rounding Mechanism: A randomized
mechanism can be defined as a probability distribution over
the deterministic fractional VCG mechanism. A randomized
mechanism can be individual rational and truthful in expecta-
tion such that a bidder’s expected utility is maximized when
the bidder bids truthfully regardless of other bidders’ strate-
gies [69]. In randomized rounding mechanisms, the main idea
is to derive integer solution by rounding off the fraction solu-
tion for any bidder chosen in a random order. Consider a
single-unit multi-item auction with optimal fractional VCG
allocation x∗ and prices p∗ , an integer solution of social wel-
fare can be estimated by rounding off using a scalingfactor
∗
α. This rounding step can be represented by: xα = l λl xl
where an integer solution xl is selected with the probability
distribution λl . In the next step, an output allocation Sil for
bidder i is obtained by randomly selecting an integer solution
xl and the payment price is calculated by:
bi (Sil ) ∗
pli = p (9)
bi (x∗ ) i
where bi (Sil ) is the bid value for the allocation obtained from
randomized rounding, bi (x∗ ) is the bid value for the optimal
fractional allocation, and p∗i is bidder i’s fractional VCG
payment price.
7) WDP for Multi-Unit Combinatorial Auction: In the case
of multi-item multi-unit (combinatorial) auction, we consider
single-sided forward auction where the auctioneer (seller)
offers m different types of items and Cj identical units of
each item j ∈ {1, 2, . . . , m}. Let us assume that bidder
i ∈ {1, 2, . . . , n} submits a bid requesting a bundle of item
with a bid price of vi . We represent the number of units
that bidder i requests for each item j by wij . The alloca-
tion problem with single-bundle bid can be generalized as
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS 2277

a multi-dimensional knapsack problem (MDKP). The inte- F. Automated Online Mechanism Design
ger programming formulation of MDKP corresponding to the Given that there is significant probabilistic information
WDP can be given as available in the market history, a real-time automated auc-

n 
m tion mechanism can be designed to predict any future events.
max vi xij The auctioneer requires exact information about the number
xi (S)
i=1 j=1 of bidders, number of items, combination of bids, bidders’
n preferences, valuations, etc. to determine efficient allocation
s.t. wij xij ≤ Cj , ∀ j ∈ M and payment rule. The probabilistic information can be use-
i=1 ful to handle uncertainties in a stochastic environment and to
m
elicit information required for designing revenue maximizing
xij ≤ 1, ∀i ∈ N auction model. In online auction models, the type of a bid-
j=1
der is labeled according to the bidder’s arrival time, departure
xij ∈ {0, 1}, ∀i ∈ N, j ∈ M (10) time, and bid value. Considering a quasi-linear5 preferences,
where xij represents whether bidder i gets item j or not. the allocation and payment rule in an online auction is deter-
The multi-unit combinatorial auction can also be designed mined such that the allocation is monotonically non-decreasing
with XOR bids where the bidder can bid on a number of and only depends on the types of bidders who have already
bundles as the demand bid. The WDP can therefore be for- arrived.
mulated as a multiple multi-dimensional knapsack problem In an online auction mechanism framework, the optimal
(MMKP) [58] and can be represented as stopping theory can be applied to run the auction periodically
at a certain time interval. In general, the optimal stopping the-

n 
Bi
ory is applied to the problem of deciding an early stopping
max vib xib
xib time to take a particular action based on sequentially observed
i=1 b=1
random variables [71]. In such optimal stopping problems,
Bi
the objective is to maximize the expected payoff or to min-
xib = 1, ∀ i ∈ N
imize the expected cost. An approximation mechanism for
b=1
online auction model can designed based on optimal stop-
m  Bi
ping rule, considering that the distribution of the number of
qijb xib ≤ Cj , ∀j ∈ M
bidders n is known and the price sequence is non-decreasing,
j=1 b=1
i.e., price never decreases for the new agent who enters into
xib ∈ {0, 1}, ∀i ∈ N, j ∈ M (11)
the system [72]. The automated mechanism is designed with
where each bidder i submits Bi bundles as bids and can win the objective to maximize the expected efficiency and revenue.
at most one bundle. Each bid bundle b contains the desired When the bidders enter sequentially and bids are independent
number of units that bidder i wants for each item j which we random variables, an online allocation rule can be defined by
denote by qijb , and the price that bidder is willing to pay for stopping rules where the auctioneer sells an item to the bid-
the bundle which is denoted as vib . The allocation of bundle der who arrives at that stopping time. Given that there is an
b to bidder i is represented as xib . initial ask price before the arrival of all the bidders, the auc-
Different generalized knapsack solvers for multi-unit combi- tioneer allocates an item to the first bidder whose bid value
natorial auction are discussed in [58]. The MDKP and MMKP is strictly greater than the price posted in the previous stop-
formulations are reducible to 0 − 1 knapsack problem3 which ping time. This sequentially posted-price mechanism allows
is NP-hard. Similar to single-unit combinatorial auctions, the mechanism to be temporarily strategy-proof by motivat-
the dynamic programming, branch and bound, and greedy ing the bidders to bid truthfully to obtain an item in the next
approaches can be used to solve the allocation problem in interval. The online mechanism provides a fractional objective
multi-item multi-unit auctions. In multi-item multi-unit auc- value of the social welfare with a constant approximation ratio
tions, randomization technique can be applied along with which can be defined by scaling the optimal social welfare.
approximation algorithm to achieve individual rationality and
truthfulness (in expectation) with approximation ratio of G. Iterative Combinatorial Auction Design
1
O(m β+1 ). In case of single-minded4 bids β = (log(m)) In a combinatorial auction, bidders may need to compute an
which guarantees (1 + ) approximation of optimal wel- exponential number of bids which can be handled by preferen-
fare [69]. tial elicitation, i.e., by computing desirable number of bids that
3 Given a set of indivisible items where each item has an individual profit are enough to obtain an optimal allocation. In order to do so,
value and a weight, the 0-1 knapsack problem can be interpreted as selecting bidders’ preferences need be elicited which can be achieved
a subset of items into a knapsack with the objective of maximizing the total through iterative auction model. In an iterative auction, the
profit of the selected items such that the total weight of the selected items auctioneer computes provisional pricing and allocation infor-
does not exceed the capacity of the knapsack [70]. The decision variable of
the 0-1 knapsack problem represents whether an item is selected or not. mation in each iteration and updates the prices according to
4 A single-minded bid (S, p) represents a subset of items that the bidders
want to obtain at bidding price p. The valuation of the subset of items in the 5 A bidder is considered to have quasi-linear preferences if the utility func-
single-minded bid is: v(T) = p for S ⊆ T and v(T) = 0 otherwise, i.e., the tion is additive and linear. The quasi-linear preferences with constant marginal
bidder wants to win the subset S at price p or nothing. utility can be represented as: U(x, y) = F(x) + y.
2278 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018

bidders’ preferences. Thus, the iterative combinatorial auction

model allows bidders to bid for the combination of items they
really want in several rounds of bidding. The iterative auctions
can be modeled as the quantity-setting or the price-setting auc-
tions which are dual to each other [73]. In the quantity-setting
auction, bidders submit prices on various combinations in each
round and the auctioneer makes a temporary allocation based
on the submitted bids. The bidders are allowed to adjust bid
price in the next round and thus the auction continues until an
efficient outcome is achieved. In later sections, we will dis-
cuss how an auction mechanism can be designed with iterative
bidding process.
In the price-setting auctions, the auctioneer sets an initial
price and collects bids from the bidders who want to buy items
at the current price. The auctioneer then observes the requests,
computes a provisional allocation, and adjusts the prices if the
provisional allocation is not efficient. The auction continues
until the competitive equilibrium (CE) is reached, i.e., winning
bidders’ payments guarantee the maximum utility gain for the
bidders. Among different price-based iterative auctions that are
Fig. 6. Flow chart of primal-dual auction framework.
presented in [73], we will discuss some of the general iterative
models in combinatorial auctions. achieved [73]. In VCG auction-based primal-dual framework,
1) Ascending Price Auction: The ascending price auction the auction terminates with the VCG payment prices for the
in [53] presents a model where the auctioneer announces an winning bidders.
initial price and receives bids submitted by bidders at the cur- Consider a single-unit multi-item auction of M =
rent price. The auctioneer calculates the aggregate demand {1, 2, . . . , m} items among N = {1, 2, . . . , n} bidders. The
and if there is any excess demand for any item, i.e., the avail- winner determination problem (WDP) can be represented as
able supply is less than the aggregate demand, then the item the following integer program:
price is increased. The auctioneer collects the bids for the
updated prices and repeats until the market clears, i.e., all items 
n 
max vi (S)xi (S)
are allocated satisfying all the non-overlapping demands. In xi (S)
i=1 S⊆M
each round, if the aggregate demand of a bidder’s opponents
n 
at the current price becomes less than the available supply s.t. xi (S) ≤ 1, ∀ j ∈ M
then the items are allocated to that particular bidder. This i=1 S⊆M, j∈S
event is referred to as clinching when the payments are calcu- 
lated according to the clinching rule. The cumulative clinches, xi (S) ≤ 1, ∀ i ∈ N
denoted by {Ci (t)}ni=1 , are computed for bidder i at current time S⊆M
t as xi (S) ∈ {0, 1}, ∀i ∈ N (13)
⎧ ⎫
⎨  ⎬ where vi (S) is the bids submitted by buyer i ∈ N to obtain the
Ci (t) = max 0, M − xj (t) , ∀t = 0, . . . , L − 1 (12) subset of items S ⊆ M and xi (S) represents whether buyer i
⎩ ⎭ gets the subset S or not. The first constraint is to make sure
j=i
that a single object in the requested subset S is assigned to at
where L represents the last iteration and xj (t) represents the most one buyer and the second constraint ensures that each
number of units demanded by bidder j = i. Bidder i’s bidder get at most one subset of items.
payment is then determined based on the current clinches, Assuming a set of all possible allocations K, we can write
ci (t) =
LCi (t) − Ci (t − 1). The total payment is given by the primal linear program based on WDP in (13) as follows:
yi = t=0 p(t)ci (t), where p(t) denotes the item’s price at
time t. 
n 
max vi (S)xi (S)
2) Primal-Dual Auction Framework: The primal-dual algo- xi (S)
i=1 S⊆M
rithm is commonly used to solve combinatorial optimization
n 
problems. Fig. 6 shows an iterative approach in the primal-dual s.t. xi (S) ≤ y(k), ∀ S ⊆ M
framework that involves linear programming duality theory. In i=1 k∈K,S∈k
a combinatorial auction, the WDP is considered as the primal 
problem which leads to a provisional allocation, whereas the y(k) ≤ 1
k∈K
dual problem solution gives feasible prices that satisfy the 
complementary slackness (CS) conditions. The primal-dual xi (S) ≤ 1, ∀ i ∈ N
auction algorithm is a truthful mechanism where the prices S⊆M
are adjusted progressively until the optimal dual solution is xi (S), y(k) ≥ 0, ∀i ∈ N, k ∈ K, S ⊆ M (14)
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS 2279

where constraints ensure that an item is allocated once in a H. Bayesian Mechanism Design
feasible solution. The integer constraint in (13) is relaxed by When the bidders’ exact valuations are unknown, Bayesian
LP-relaxation as xi (S) ≥ 0. approach [77] can be used to learn bidders’ valuations. In
The dual problem of (14) can be written as follows [74]: the Bayesian approach, the bidders’ valuation information is
 n drawn from a publicly known distribution at random which
min z(i) + π is regarded as bidders’ common knowledge. In order to learn
z(i),z(S),π
i=1 own bid valuation, a bidder updates his/her strategy profile
s.t. z(i) + z(S) ≥ vi (S), ∀i ∈ N, S ⊆ M
 to determine distribution over the valuations of the remaining
π− z(S) ≥ 0, ∀k ∈ K bidders. Once the bidders learn their valuations, Bayes-Nash
S∈k equilibrium is achieved for the auction mechanism by selecting
z(i), z(S), π ≥ 0, ∀i ∈ N, S ⊆ M (15) highest bidders as the winners. An auction will be Bayesian
where the optimization constraints in the primal problem (14) incentive compatible if truthtelling is the dominant strategy
corresponds to the dual variables z(i), z(S), and π respectively. of all bidders which results in Bayes-Nash equilibrium. The
Here, z(i) represents the price for bidder i’s maximum util- characterization for designing a revenue maximizing optimal
ity and π represents the auctioneer’s maximum revenue. The auction mechanism in a Bayesian setting, is defined for single-
dual constraints in (15) corresponds to the primal variables dimensional mechanism in [60] which is also referred to as
xi (S) and y(k). For optimality, the feasible primal and dual the Myerson’s characterization. The single-dimension auction
solutions should satisfy the complementary slackness (CS) mechanism can be considered as a bargaining auction game
conditions [74]. To determine the solution to the dual program between a seller with a single-unit single-item and a buyer.
can be computationally hard as solving the original primal According to this characterization, optimal allocation and pay-
problem. ment for the self-interested bidder i with linear utility can be
In the primal-dual framework, the finite optimal solution to obtained in Bayes-Nash equilibrium if and only if
the WDP can be obtained by using the approximation tech- (i) the allocation xi (vi ) is monotone non-decreasing for
nique of Lagrangean relaxation [75]. The Lagrangean relax- strategy profile or bid valuation vi , and
v
ation is generally applied to relax the allocation constraints of (ii) payment rule is: pi (vi ) = vi xi (vi ) − 0 i xi (z)dz + pi (0),
the WDP, by transferring the constraints to the objective func- where often pi (0) = 0.
tion with penalizing non-negative variables known as Lagrange The optimal allocation and payment rule satisfy incentive com-
multipliers. The Lagrange multipliers are considered as the patibility and individual rationality in Bayes-Nash equilibrium
item prices and using this information as the feedback the and maximizes the expected profit. For multi-dimensional auc-
bidders update their bids iteratively. We consider a Lagrange tion with multiple items (single-unit or multi-unit) or multiple
function by relaxing the constraints of the WDP in (13) as sellers and buyers, the characterization for optimal revenue
follows: maximizing auction can be modified according to different
 bidding preferences [77].
L(x, λ, μ) = vi (S)xi (S) When the bidders’ valuations are not taken from an iden-
i∈N S⊆M tical distribution, i.e., the bidders do not have common
⎛ ⎞
   priori knowledge, then approximation is applied in mecha-
+ λj ⎝1 − xi (S)⎠ nism design based on reserve pricing. In case of second-price
j∈M i∈N S⊆M,j∈S auction with a distinct seller’s reserve price, the auctioneer
⎛ ⎞
first removes all bidders whose values do not meet the reserve
 
+ μi ⎝1 − xi (S)⎠ (16) price and then select the highest bidder as the winner from
i∈N S⊆M the remaining bidders. The allocation price will be the maxi-
mum between the reserve price and the second highest value
where λ = (λ1 , λ2 , . . . , λm ) and μ = (μ1 , μ2 , . . . , μn ) are
of a surviving bidder (if any). Another approximate pricing
the non-negative Lagrange multipliers. Now, the Lagrangean
mechanism is posted pricing where distinct allocation can be
relaxed problem corresponding to the WDP can be represented
determined using first-come-first-served and while-supplies-
similar to the resource scheduling problem in [76]
last concepts. In this auction, the bidders are considered to
Z(λ, μ) = max L(x, λ, μ) arrive in any arbitrary order decided by the auctioneer who
s.t. xi (S) ∈ {0, 1}, ∀i ∈ N (17) serves them sequentially according to the posted prices. The
variants of auctions under Bayesian setting for system models
The dual of the Lagrangean relaxed problem can be written as: with multi-seller, multi-buyer, multi-item, non-linear prefer-
min Z(λ, μ) ences are discussed in [77]. For scenarios with bid uncertainty,
s.t. λ ≥ 0, μ ≥ 0 (18) auction-based virtualization model in Bayesian settings will be
discussed in later sections.
The optimal solution to the Lagrangean dual problem gives
the dual solutions of the original WDP, i.e., the allocation I. Budget-Constrained Auction Design
prices of items. By using the sub-gradient method in convex We consider an auction with budget constraint with simple
optimization [75], the optimal values of Lagrange multipliers additive valuation (without any complementarity or substi-
can be obtained. tutability), where N = {1, 2, . . . , n} is the set of bidders and
2280 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
TABLE IV
S UMMARY OF AUCTION M ECHANISMS S UITABLE FOR WNV
M = {1, 2, . . . , m} is the set of heterogeneous items. Let
us assume that bidder i ∈ N has a maximum budget of Bi
and the bidder bids on item j ∈ M with the bid value of
vij . We denote the allocation of item j to the bidder i by xij
and price that 
bidder i is willing to pay for the allocation is
pi = min{Bi , m j=1 vij xij }. The allocation problem that aims
for revenue maximization can be represented by the following
integer programming problem:

max pi
i∈N

m to the valuations submitted by other bidders and a random
s.t. pi ≤ vij xij , ∀i ∈ N,
j=1
pi ≤ Bi , ∀i ∈ N,
n
xij ≤ 1, ∀j ∈ M,
i=1
xij ∈ {0, 1}, ∀i ∈ N, j ∈ M, (19)
where the first constraint represents the maximum amount the
buyer i can pay to obtain all the available items. The second
constraint gives the maximum budget limit for buyer i and the
third constraint represents that at most one buyer can get an
item.
The optimal allocation for this budget constrained auction
is NP-hard even in the case for two bidders with identical
bids. The time complexity of dynamic programming approach
to find the exact solution of the budget-constrained auction is
exponential in the number of items. The approximate alloca-
tion for the budget-constrained auction with constant number
of bidders can be obtained using the randomized rounding
algorithm [78].
The VCG mechanism with general valuation is not directly
applicable in auction models with budget constraints. A
sequential auction-based model for budget-constrained bid-
ders is presented in [79]. Bayesian approach can be applied
to budget-constrained auction model considering that the bid-
ders’ private valuations are taken from mutually independent
publicly known prior distributions.
A Bayesian incentive compatible (BIC) mechanism is
presented in [80] which is individual rational and approx-
imately maximizes the expected revenue of the auctioneer
under the budget constraint. This is an all-pay mechanism
where each bidder pays a fixed price depending only on his/her
revealed valuation. Each bidder gets an allocation according
choice made by the mechanism. This mechanism is unrealistic
in several situations and can be upgraded as the truthful dom-
inant strategy incentive compatible (DSIC) mechanism based
on the sequential posted price scheme. The auctioneer will
consider the bidders following an arbitrary sequence of order
and the bidders will select the subset of items and pay the
pre-computed prices.
A summary of the auction mechanisms suitable for virtual-
ization applications is provided in Table IV. The summary
outlines the advantages and main challenges of designing
VCG-based auction, stochastic online auction, double auc-
tion, iterative auctions and Bayesian auctions. These auction
mechanisms can be extended using game theory concepts
and learning algorithms to design other variants of auction
models as per the requirements for implementing the vir-
tualization. For example, a two-stage auction game can be
designed for power allocation in WNV framework. An ini-
tial power allocation can be obtained by solving WDP in the
first stage. In the second stage, the initial power allocation can
be adjusted by determining optimal bidding strategies for SPs
based on Stackelberg equilibrium. We discuss the application
of game theory and learning algorithms in auction mechanism
in Section IV.
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS 2281

TABLE V
O RGANIZATION OF S ECTION IV

IV. AUCTION A PPROACHES IN WNV of MVNOs who participate as bidders and submit their bids
In this section, we will review the existing literature that to the InP according to their users’ requirements.
consider auction models for virtualization of wireless network Suppose MVNO i has Ki subscribers and it requires a subset
infrastructure and resources. We will discuss the applications of RBs Si to serve its users. It valuates the bid price to obtain
of different auction-based virtualization models designed to the subset Si in a way that maximizes the total utility of all
virtualize radio access network infrastructure and resources, users as given by

network functions, and cloud services. Moreover, we will dis- vi (Si ) = max uk (rk (Xi )) (20)
cuss the auction approaches for virtual network embedding Xi
k∈Ki
procedure and how auction mechanisms can be designed to
where rk (Xi ) represents the rate of user k for the allocated RBs
guarantee fairness in resource allocation and pricing. We will
as indicated in [Xi ]|Si |×|Ki | matrix. If the user k ∈ {1, 2, . . . , Ki }
provide a summary of existing auction-based virtualization
gets an RB j ∈ Si , then element xj,k = 1 in Xi , otherwise
models in the context of practical deployment, along with a
xj,k = 0. The allocation matrix Xi also satisfies that each RB
tabularized comparison of existing works. The organization of
j ∈ Si is not assigned to more than one user. Each user has a
this section is shown in Table V.
data rate requirement and the user rate rk (Xi ) is determined by
|Si |  
phj,k
A. Auction-Based LTE Virtualization rk (Xi ) = B log2 1 + xj,k (21)
N0 B
In an LTE-based cellular network, the hypervisor is in j=1
charge of running the virtualization process and assuring that where B is the bandwidth, p is the transmit power, hj,k is the
the SPs get the desired resources and they pay accordingly channel gain for user k on each RB j ∈ Si , and additive white
for the allocation. The LTE hypervisor belonging to the InP Gaussian noise spectrum density is denoted by N0 .
virtualizes a physical eNodeB into virtual eNodeBs such that In LTE virtualization model for mixed traffic scenario is
virtual resource blocks and virtual networks are assigned to considered in [27] where MVNOs have users with different
respective MVNOs or SPs. The VCG auction is considered data rate requirements. The MVNOs submit bids to lease RBs
to be an efficient mechanism where the main objective is to from an InP and determine their bidding strategies by using
maximize the bidders’ total valuation, not the seller’s revenue. a unified utility function for their users. The unified utility
The VCG mechanism also guarantees that bidders get incen- function for user k is given by
tive for truthful bidding in order to prevent them from cheating. 1
In cellular networks, the primary objective of allocating spec- uk (rk ) = −C(r
+D (22)
1 + Be k −d)
trum resources to users is to satisfy their QoS requirements.
Therefore, VCG auction-based models are suitable for sce- where d is the QoS requirements and C represents the slope
narios where the SPs or MVNOs aim to increase their utility of the user’s gain in service level. The parameters B and D
gain by satisfying their users’ data rate demands. In a mixed are adjusted according to the range of the utility function.
traffic scenario, there can be a group of users with certain The InP collects the resource requests and solves the RB
data rate requirements and another group of users with no allocation problem based on VCG mechanism. The WDP with
rate requirements. The virtualization of spectrum resources the objective of maximizing total welfare can be represented as

should be performed in an optimized way that all users get RBs SVCG = arg max vi (Si )
according to their QoS requirements. In [27], a VCG auction- (S1 ,S2 ,...,SN ) i∈j
based model is considered where the InP plays the role of s.t. S1 ∪ · · · ∪ SN = S,
an auctioneer and the MVNOs compete for RBs as bidders.
Si ∩ Sk = ∅ ∀i, k ≤ N, i = k
The allocation of RBs is performed in two stages. The InP 
slices the RBs for MVNOs first and then the MVNOs assign |Si | ≥ Mi , ∀i ≤ N, Mi ≤ |S| (23)
RBs within their virtual slice to serve their users. The authors i
consider a unified utility function to model mixed traffic con- where (S1 , S2 , . . . , SN ) are the optimal disjoint allocations of
ditions in the virtualization process. They assume N number RBs obtained from VCG mechanism. The first two constraints
2282 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
Fig. 7. Stochastic resource allocation game [21].
represent the isolation of RBs allocated to MVNOs and the
third constraint guarantees that each MVNO i gets at least Mi
number of RBs. The authors propose an approximate solu-
tion using a heuristic algorithm. The InP uses the heuristic
algorithm to assign RBs to the MVNOs starting with the high-
est valuation and continues assigning RBs until the MVNO’s
demand is not satisfied. The allocation among users served
by an MVNO ensures fairness in a way that users with QoS
requirements are assigned with RBs first and then remaining
users get RBs. The price that each MVNO pays to the InP is
calculated by using the VCG payment rule.
In this auction model, the bidders require to bid truth-
fully to achieve maximum utility for the allocation of each
RB according to the VCG mechanism. Due to the require-
ment of calculating a large number of possible allocations for
each MVNO, the authors only present an approximate solution
obtained from the heuristic algorithm and does not analyze the
other economic properties. The competition among different
InPs is also not considered, which may further increase the
computational complexity.
B. Stochastic Auction-Based Virtualization
The varying channel and propagation characteristics in the
wireless environment bring challenges to fair and efficient
allocation of resources in wireless networks. The auction
mechanism for resource mechanism for such stochastic wire-
less environment can be modeled as a stochastic game as
in [20]. The InP and the SPs interact with each other to
exchange traffic information and the resources are allocated
dynamically over the auction time slots. This dynamic game
of resource allocation is performed in two phases - current and
future resource allocation.
As shown in Fig. 7, the InP collects the bids from all SPs
in the current phase and performs the VCG mechanism to
determine resource allocation and payment for each SP assum-
ing that it has prior knowledge of channel profiles. The InP
also computes the conjectural prices which is an estimate of
rate allocation cost per unit sub-channel. The SPs compute the
state-value function, i.e., the bid value for the future state by
using the state transition probability and the conjectural prices
provided by the InP. This VCG-based one shot resource allo-
cation game is performed in the current phase and continued
repeatedly over the future states. The truthful revelation of bid
values in the VCG mechanism allows the InP to compute the
Nash equilibrium for the virtualization framework. In addi-
tion, incentive compatibility is achieved for both the InP and
the SPs. However, the InP requires knowledge about the dis-
tribution of the channel conditions and the SPs need the state
transition probabilities for updating the state value function. To
address this issue, the stochastic game model is simplified with
an iterative approach presented in [21] that allows updating
the conjectural prices without any prior knowledge. A sub-
gradient method-based online learning algorithm is considered
to update the conjectural prices. We will discuss the auction
models designed to learn and optimize bidding price estima-
tion in the following section. In real systems, the primal-dual
framework can also be utilized to estimate the future prices
and the bid value for each state simultaneously.
C. Auctions for Virtualization With Adaptive
Bidding Strategies
In the VCG mechanism, the allocation is performed in one
round based on bidders’ submitted bids. When SPs participate
as bidders in the virtualization framework, SPs are expected
to have knowledge about their bidding strategies. Therefore,
the SPs need to determine the exact amount of resources they
need to satisfy their users and also the price they want to pay
to obtain those resources. In real scenarios, determining the
bidding strategies is critical due to the time-varying channel
conditions in wireless networks. Therefore, the InPs can per-
form the auction periodically to model the interaction between
the InPs, SPs, and users. In each time period, the SPs will
determine their demand and the InP will allocate the resources
based on the bids submitted by SPs.
A VCG-based dynamic auction model is presented in [30]
where an InP virtualizes the physical resources of a massive
MIMO antenna system into spatial streams and allocates them
to MVNOs based on their demands. Each MVNO then sched-
ules their users on the acquired resources. In this virtualization
model, the authors consider an auction-time block based on
spatial multiplexing. In every auction-time block, the InP esti-
mates the channel conditions and sends channel estimates
to the MVNOs. The MVNOs then compute the number of
streams they need and submit their bids accordingly. The InP
uses the one round VCG mechanism to determine the winners
and the number of spatial streams for winning MVNOs using
a heuristic algorithm. The payment is calculated according to
the VCG payment rule. Suppose MVNO i wins Si number of
spatial streams by submitting the bid bi . Then, the price that
MVNO i will pay is calculated as
 
Pi = Sw bw − Sw bw (24)
w∈W w∈W
where W is the set of winning MVNOs and W is the set of
winners without MVNO i’s participation.
Every MVNO determines the bidding strategies in a way
that maximizes its utility, i.e., the difference between the total
profit the MVNO can achieve with the resource blocks and
the estimated payment price for the resources. In [30], the
profit value of the spatial streams is estimated according to
the average achievable rate and uses a uniform spatial stream
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
price which is learned from the auction outcome in the last
auction-time block. For instance, if an MVNO i has Ki users
and the unit spatial stream price in the last auction-time block
is Ci (t−1), then the bidding strategy can be derived by solving
the following problem:

Ki
max δ rk − Ci (t − 1)Ki (25)
Ki
k=1
where rk is the achievable rate for user k and δ is the monetary
unit representing MVNO’s profit per unit of data. The bid
value can be obtained from the ratio of the total profit gain
and the number of users.
The estimated price from the last round of auction is a
local information which may not be accurate. A learning algo-
rithm can be applied to estimate the price more accurately in
a dynamic manner. Such a VCG auction-based virtualization
model is presented in [22] that incorporates the Q-learning
algorithm to determine SPs’ optimal bidding strategies. In each
auction time slot, the InP allocates the resources dynamically
to increase the resource utilization efficiency based on the link
quality and traffic information exchanged by the SPs. Each SP
abstracts the traffic information using a satisfaction function
which indicates the SP’s evaluation of service level on the pos-
sible allocated bandwidth. Assuming that SP i has Ki users,
the satisfaction function is given by [22]

Si (xi ) = bi ak uk (xki ) (26)
k∈Ki
where uk denotes the utility of user k for the allocation xki
which can be computed based on the achievable rate and ak is
a unit parameter to scale the user’s utility. The bidding price
bi is chosen from a strategy set which consists of countable
number of bid values. The self-interested SPs may choose a
bid value different than the true one if they find any chance
to maximize their own profit gain. Since the InP does not
have any clue about how the satisfaction function is evaluated,
the SPs gets the opportunity to bid untruthfully. To ensure
truthfulness, VCG allocation and pricing rule can be applied
which also guarantees individual rationality.
In each time slot t, each SP i selects a bidding strategy as the
bidding price bti and an demand bandwidth xit that predicts the
maximum profit gain. The reward of SP i for the state-action
pair (s, a) is given by
   
R(s, a) = yt+1
i bt+1
i , xi
t+1
− yti bti , xit (27)
where the payoff is the difference between the achieved profit
gain and payment price and is represented by yti = Si (xi∗ ) −
vcg
pi . The Q-value corresponding to the state-action pair is
updated as follows:
 
Qt+1 st , at = (1 − β)Qt (st , at ) + β
  
× R(st , at ) + γ max Qt st+1 , at+1 , (28)
a tive of maximizing the total achievable user rate. The initial
where β is the learning rate, which refers to the extent the
previous bidding strategy is updated and γ is the discount
rate which estimates the future reward value. The SPs bid
truthfully to ensure that the Q-learning algorithm converges to
2283
the optimal bidding strategy that maximizes reward over time.
The payoff for each SP is a quasi-convex6 function which
guarantees the existence of Nash equilibrium [22].
D. Auction Approaches With Game Theory for Virtualization
In order to design the interaction between the mobile users
and SPs, an efficient mechanism is desired such that SPs
can exactly determine users’s resource demands and the bid-
ding price. Game theory can be applied to auction mechanism
design to determine the optimal bidding strategies.
A power allocation mechanism for virtualized wireless
networks is presented in [29]. In this mechanism, a single
access point (AP) that belongs to an InP collects the resource
requests from SPs who require transmission power to serve
their users. The InP virtualizes the available power units to
share the limited power among multiple SPs. A two-stage
game is formulated based on the sequential auction model and
the Stackelberg equilibrium solution is selected as the optimal
bidding strategy. In the first stage, the SPs derive the desired
transmission power and optimal bid price with the objective
of maximizing their utility. In this system model, the utility
of user k in SP i is defined as
uki = βki Rki − αki Pki (29)
where βki is the gain per unit transmission rate of Rki and αki
is the price per unit transmission power Pki between the user
k and SP i. The optimal bidding strategies are obtained as the
Stackelberg equilibrium.
In the second stage, the InP performs a sequential auction to
allocate power resources based on SPs’ traffic load. The InP
initially determines an allocation for SPs which is updated
further for load balancing. Underloaded SPs, who want to
sell their rest of the power resources, reveal ask prices per
unit power. On the other side, overloaded SPs reveal power
requirements and bid prices. Power from underloaded SPs is
reallocated to overloaded SPs through sequential auction. The
auction finally terminates when the overloaded SPs obtain their
required transmission power or all the remaining power is sold
out.
The self-interested SPs desire to obtain more transmission
power for higher transmission rate for their mobile users.
However, the InP has limited transmission power and it desires
to ensure efficiency as well as fairness. In order to design a
power allocation mechanism with fairness guarantee, a two-
stage auction game can be formulated using coalitional game
theory. The power allocation scheme in [28] considers time-
varying constraint in power allocation problem formulation.
The InP periodically collects the bidding information from
MVNOs. At each time period, the InP calculates an initial
payoff and payment using VCG mechanism with the objec-
6 A utility function u(x) of bidders x ∈ {1, 2, . . . , n} defined on a convex
set S is quasi-convex if the lower level set {x ∈ S : u(x) ≤ a} is convex for
any real number a.
2284
payment for user k of MVNO i is calculated as

l=K 
l=K
cik = max Ril − Ril
pik,j =0
l=1,l=k l=1,l=k
where the first part is the maximum data rate given that the
transmit powers for RBs allocated to user k are set to zero, and
i,VCG
pl,k represents the optimal power allocation obtained from
the VCG mechanism. The payoff of user k can be determined
as mik = Rik − cik , where Rik is the achievable data rate of user
k under MVNO i. In the second stage of power allocation,
a coalition game is developed among MVNOs to adjust their
users’ initial payoff and payments using the Shapley value.
This is to ensure fair allocation of power resources among
users based on their rate requirements.
An iterative resource bidding auction mechanism is
proposed in [31] where transmit power and sub-channels are
virtualized through a non-cooperative game. The substrate
wireless network controller of the InP abstracts the avail-
able resources based on the users’ QoS requests and allocates
the virtual network slices accordingly. The users indepen-
dently derive the optimal request strategies and submit their
bids dynamically during each auction interval. The strategy
of user k consists of two types of resource requests and can
p p
be represented by Sk = (xk , xkn ) where xk denotes the amount
n where Fi (bi ) is the probability distribution of SP i and fi (bi )
of transmit power units and xk denotes the number of sub-
channels desired by user k. The payoff or utility of each
user is computed based on effective capacity on the requested
resources minus the cost of each resource type. The effective
capacity represents the maximum rate of a service process that
needs to be achieved to satisfy the QoS. The payoff of user
k for the resource request Sk with QoS requirement of βk is
given by
  p  
yk (Sk , βk ) = α1 Ek (Sk , βk ) − α2 cp xk + cn xkn
where α1 and α2 are the weight parameters for effective
capacity and cost, respectively. The cost of allocated trans-
p
mit power and sub-channels are denoted by cp (xk ) and cn (xkn ),
respectively.
The users derive the optimal bidding strategy by solving the
following optimization problem
Sk ∗ = arg max yk (Sk , βk ),
Sk
  
K
(n)
s.t. E pk ≤ Pk and nk ≤ N, ∀k
k=1
where the constraints represent the maximum transmit power
units per user and sub-channel capacities for all users. At
first, the users determine the optimal transmit power by max-
imizing the payoff on each sub-channel using the Lagrange
function. The Lagrange variables are updated iteratively with
a fixed step size and converge to Nash equilibrium of transmit
power request strategy. Then, the users find the optimal num-
ber of sub-channels by maximizing overall payoffs based on
the obtained optimal transmit power.
IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
E. Auction for Virtualization in a Bayesian Setting
In the WNV framework, the role of SPs can be extended by
  allowing them to lease their idle resources to other SPs as a
i,VCG
pl,k (30)
virtual InP. This will bring an additional profit to SPs. An auc-
tion mechanism can be designed for such a scenario with the
objective of maximizing the resource utilization and achieving
additional revenue. A bandwidth reuse mechanism for SPs is
presented in [23] where the SPs can act as the virtual InPs
and lease idle bandwidth to other SPs. The virtual InPs may
also behave strategically and may not reveal their idle band-
width truthfully. To guarantee truthfulness, VCG mechanism
can be applied that provides incentives to the SPs by max-
imizing their welfare. The mechanism should also consider
providing incentive to SPs for maximizing revenue when they
act as the virtual InPs. In the traditional VCG mechanism,
the bidders’ valuations are private information which cannot
lead to optimal revenue. Hence, a mechanism can be designed
in Bayesian setting where the SPs’ bid valuations are drawn
from publicly known independent distributions. The classi-
cal Myerson’s optimal mechanism in [60] can be adopted to
improve the VCG auction for revenue generation. For each
buyer SP i, a virtual bid is computed as
1 − Fi (bi )
vi (bi ) = bi − (33)
f (bi )
is the probability density function for bid value of bi . The
virtual bids are monotone non-decreasing. In the next step, the
winners are determined by solving the following problem that
maximizes the sum of winning virtual bids among N bidders:

N
max vi (bi )xi (b−i , bi )
bi
i=1
N
s.t. di xi (b−i , bi ), (34)
(31)
i=1
where di denotes the bandwidth demand and xi indicates
whether SP i wins or not. This problem can be considered
as a knapsack problem where the virtual bids are the profit
value of the items and the demands are the weights of items.
This problem can be solved exactly by the dynamic program-
ming algorithm which will guarantee efficiency with optimal
expected revenue. The payment price can be calculated based
on VCG pricing rule.
F. Double-Sided Auction for Virtualization
(32)
The single-sided auction models discussed above, are
designed based on the competition among multiple buyers who
want to obtain resources from a single seller. The buyers sub-
mit bids to the seller who plays the role of the auctioneer.
In real scenarios, there will be competition on both sellers’
and buyers’ ends. To incorporate the competition among the
sellers, we can design a double auction model where multiple
sellers can participate in the auction by submitting ask bids.
In the framework of virtualizing RAN resources in cellular
network, Fig. 8 depicts an iterative double auction model
where M InPs and N MVNOs interact with each other for
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
Fig. 8. A double auction model in SDN-based cellular network.
dynamic resource allocation via a SDN controller who acts
as the auctioneer. The InPs submit ask bids to the SDN con-
troller that contain the number of available spectrum and BS
resources and the prices at which the InPs want to sell their
resources. Similarly, SPs submit bids requesting for desired
amount of resources and the prices that SPs are willing to
pay. The SDN controller computes the allocation problem and
updates the prices iteratively to obtain an optimal solution
that satisfies both InPs and SPs. Once the optimal solution
is achieved, the SDN controller collects the payments from
SPs and transfers to respective InPs.
An SDN-based generalized virtualization framework is
presented in [32], that considers mobile traffic with diverse
QoS requirements. The authors assume that the physical
resources are leased based on pre-contracts on pricing and
charging rules. The SDN controller takes the responsibility for
partitioning the various wireless service requests into multiple
slices of traffic flows and enables multi-flow transmission. The
SDN controller receives the ask prices from InPs who want to
share their network resources and also collects bids from SPs
who want to lease these resources to meet their subscribers’
demands. The authors adopt a VCG-based iterative approach
to virtualize the traffic flows with diverse QoS requirements.
Consider M = {1, 2, . . . , m} InPs as the sellers where each
InP j ∈ M has Lj BSs and N = {1, 2, . . . , n} MVNOs as
the buyers where each MVNO i ∈ N has Ki users. We
denote the set of all BSs by L and the set of all users by K.
Therefore, the social welfare maximization problem for the
double auction model is defined as [32]
    
max Ui (xi ) + Vj yj − pij Tij
(x,y)
i∈N j∈M i∈N j∈M
 enabled cellular network. In the upper level of this hierarchical
s.t. xk,l ≥ rkmin , ∀ k ∈ Ki
l∈L
 nas from the InPs. The MVNOs compute bids for all possible
yk,l ≤ qmax
l ,∀l ∈ L
k∈K
yk,l ≥ xk,l , ∀k ∈ K, l ∈ L
yk,l ≥ 0, xk,l ≥ 0, ∀k ∈ K, l ∈ L (35)
where Ui (xi ) is the utility of MVNO i that aggregates all users’
utilities and Vj (yj ) is the sum-utility of InP j. The total amount
of data requested by MVNO i is denoted by xi and the amount
of data provided by InP j is yj . In the optimization problem, the
first constraint represents the minimum data rate requirement
2285
of each user k of MVNO i and the second constraint represents
the total amount of data offered by BS l. The third constraint
ensures that the data rate provided by BS l is not less than the
data requested by user k. To globally optimize the social wel-
fare, Zhang et al. [32] derives the KKT conditions using the
Lagrange function where the Lagrange multipliers are referred
to as shadow prices. However, the optimal solution is infeasi-
ble due to insufficient information about the utility functions
and thus the authors present an iterative approach to solve
the problem. At each iteration, the mechanism calculates the
bidding strategies for InPs and MVNOs separately using the
truthful VCG mechanism and also obtains the shadow prices.
The primal optimization problem with the KKT conditions is
transformed into a dual problem. The shadow prices of the dual
problem are updated iteratively using sub-gradient method.
However, the analyses for the duality gap and economic
properties are not provided.
Another double auction based virtualization model for
multi-flow transmission is proposed in [81] which guarantees
fairness in mixed traffic scenario and also preserve energy con-
sumption by reducing the cost budget and balancing traffic
loads among BSs. This paper introduces distance-based trans-
action cost which includes costs associated with signaling,
backhaul, etc. The transaction cost is applied to an MVNO
when it purchases data from an InP. The transaction cost is
directly proportional to power consumption and transmitted
data amount which allows to control the energy efficiency
of the virtualization model. The social welfare maximization
problem for this double auction model is solved by a similar
iterative approach discussed above.
G. Hierarchical Auction for Virtualization
In the generalized virtualization framework, the InP allo-
cates the virtual network slices to the MVNOs and also
schedules resource assignments for end users. Therefore, the
computational complexity of virtualization increases which
can be reduced by performing the resource allocation in
multiple stages. If the MVNOs are allowed to compute
the assignment of resources within the slice according to
their users’ requests, then computational burden at the InP
reduces significantly. Such a hierarchical auction is presented
in [33] and [34] where the resources are allocated in two
stages: InP to MVNOs and then MVNOs to users. This
hierarchical auction is designed considering a massive MIMO-
auction, the MVNOs bid for sub-channels, power and anten-
combinations of resource bundles using the general valuation
model. MVNO i with Ki subscribers determines a resource
bundle Si = {Ci , Pi , Ai } where Ci , Pi and Ai are the number
of desired sub-channels, transmit power units and antennas,
respectively. The MVNO i’s valuation for the resource bundle
Si is given by

vi (Si ) = qk (Si ) − qres
i (36)
k∈Ki
2286 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018

where qk (Si ) is the price paid by user k in the lower-level Both upper and lower level auctions use the same pricing
auction and qres
i is a reserve price for MVNO i. In the lower- scheme. For the exact solutions, users’ payment prices are
level auction, MVNOs allocate the resources obtained from calculated using VCG pricing rule which is expressed as
InPs among their subscribers. Users determine bids using a    
vj S̄j∗ − vj (Sj∗ )
vcg
linear valuation function. Consider the resource request bundle qk = (40)
for user k is Sk = {ck , pk }, where ck and pk are the number j=k j=k

of subchannels and transmit power unit requested for user k. where the first part of (40) represents the welfare without user
The valuation of user k for the requested bundle Sk can be k’s participation and the second part represents the welfare
represented as contributed by the other users in the chosen allocation.
To avoid any decrease in seller’s revenue, the VCG price
vk (Sk ) = δk rk (Sk ) (37)
is adjusted with a minimum reserve price and the final price
where δk is a constant parameter to scale achievable user rate charged to user k will be qk = max{qres
vcg
k , qk }. For the approx-
rk for the bundle Sk . imate solutions, a VCG-like payment is calculated as follows
greedy
The authors analyze the auction model both for single-seller qk = max{qresk , qk } and the price for greedy algorithm is
multi-buyer and multi-seller multi-buyer cases. For single- calculated as
seller multi-buyer case, the WDP for lower level auction is greedy vj 
represented as qk = max  |Sj | (41)
j∈Bk |Sj |

max vk (Sk )xk where Bk represents the set of users who lose the bid due to
xk
k∈Ki user k’s participation and thus the price is computed according

s.t. pk (Sk )xk ≤ Pi to the highest bid the user k defeats.
k∈Ki The analyses of auction properties in this hierarchical auc-
 tion shows that the VCG scheme with the exact WDP solution
xk ≤ L, ∀n
achieves allocation efficiency, individual rationality, and incen-
k∈Ki n∈Sk
tive compatibility at each level. On the other hand, the payment
xk ∈ {0, 1}, ∀k (38)
rule for the approximate solution achieved using the greedy
where the objective is to maximize the social welfare or total algorithm guarantees incentive compatibility for single-minded
valuation of users who win the auction, the first constraint users in the lower-level auction only. The proposed hierar-
gives the maximum transmit power capacity limit and the sec- chical auction is in offline setting which can be extended to
ond constraint represents the maximum number of users who online auction model to allocate resources dynamically based
can share a sub-channel n. This WDP can be solved exactly on users’ actual demand.
using a dynamic programming-based algorithm for a low-scale
deployment scenario. A greedy algorithm based approximate H. Auction for Network Function Virtualization
solution is also proposed in [33].
The virtualization technique allows to abstract not only
The WDP for the upper-level auction between the InP and
the physical resources but also the wireless services and
MVNOs is represented as
  network functionalities. The requirements for users’ service
max vi (Si )xi (Si ) level, resource negotiation and contracting can be automated
xi
i∈N Si ⊆i using an auction-based virtualization framework. A two-stage
  Vickrey auction is proposed in [26] for on-demand alloca-
s.t. Ci (Si )xi (Si ) ≤ C
tion of heterogeneous commodities. At first, SPs compute the
Si ⊆
i i∈N
  resource cost for a package of virtual resources and submit
Ai (Si )xi (Si ) ≤ A the quotes as VN bidders. The quotes of the requested VN
Si ⊆
i i∈N segments are mapped with maximum reservation prices and
 
Pi (Si )xi (Si ) ≤ P feedback is sent to the VN bidders asking for final resource
Si ⊆
i i∈N demands. In the second stage, the VN segments are assigned
 to the lowest VN bidder of that segment according to the final
xi (Si ) ≤ 1, ∀i ∈ N
quoted price. This package-based bidding strategy results in
Si ⊆
i
heuristic resource partitioning that minimizes cost.
xi (Si ) ∈ {0, 1}, ∀i ∈ N, Si ⊆
i (39)
1) Dynamic Auction With Optimal Payment Strategy: In
where the optimization problem aims to maximize the total the SDN/NFV-enabled network, the SDN controller operates
valuation of MVNOs and the first three constraints represent within NFV framework to offer newly innovated services
the capacity limits of sub-channel, antennas and power, respec- through virtualization. In the NFV-enabled network service
tively. The other constraints ensure that at most one set of chaining model, a continuous chain of network functions is
resource bundle is assigned to MVNO i over the all possible virtualized as virtual network functions (VNFs). The network
combinations of XOR bids which is denoted by
i . Similar service chaining is designed to provide high QoS to the IoT
to the lower-level auction, dynamic programming-based algo- devices. The network service chaining also allow data offload-
rithm and greedy algorithm can be used to solve the WDP for ing to improve QoS for end users. The network function
the upper-level auction. virtualization model in [35] provides an efficient solution for
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
dynamic service provisioning through flexible VNF instances.
A VNF service chain consists of a sequence of VNFs that
is traversed during data flow implementation. The SPs aggre-
gate the necessary VNFs and deploy VNFs in the data center
according to users’ demands. The dynamic resource provi-
sioning can be implemented through an auction in this NFV
market model. The VNF service chains are auctioned among
users with the objective of maximizing the social welfare. The
auction is designed based on the primal-dual approximation
algorithm and provides a truthful and computationally effi-
cient solution with a payment strategy obtained by using the
Myerson’s optimal mechanism [60].
2) Iterative Online Auction With Price Learning Algorithm:
An SP can lease resources from other suppliers and aggregate
with its pool of computing resources. The SP can then vir-
tualize its own computing resources and bandwidth as VNF
service chains and assign them to users dynamically. The
online auction hosted by SP in [40] considers stochastic arrival
of users’ bids and allocates VNF service chains based on
the primal-dual framework. A user can compute demands by
defining the desired number of VNF instances and bandwidth
and respective bid prices according to estimated arrival rates,
capacity and processing delay of traffic flows. This multi-seller
multi-buyer auction model aims to maximize the social welfare
by deriving primal and dual solutions. Exploiting the online
price learning algorithm, the auction model is extended to han-
dle the bid departures after a specific period of time. The
algorithm enables to learn resource availability and average
prices for future time slots based on the arrived bids.
I. Auction for Virtualization of Cloud Services
In the 5G wireless network architecture, cloud comput-
ing will be integrated with virtualization to abstract different
computational resources, memory, processing units as well
as different network functionalities such as edge computing,
caching, etc. The various network operations are segmented
into different cloudlets which can be managed by a central-
ized cloud manager. The cloud SPs will virtualize the cloud
resources and functionalities as cloud services and assign them
to cloud users. The cloud services can be allocated to cloud
users through an auction mechanism. The SDN/NFV based
architecture supports virtualization for various system models
such as C-RAN, radio-as-a-service (RaaS), infrastructure-as-
a-service (IaaS) or everything-as-a-service which may include
virtualizing IoT devices, edge computing, fog computing,
cache placement, etc.
1) VCG-Based RaaS Auction: Through virtualization, the
radio spectrum resources of an InP can be provided as a ser-
vice, which is known as RaaS. The virtualization model for
RaaS can be modeled as an auction mechanism where the
MVNOs can lease radio resources from RaaS cloud provider
and pay for the service. A VCG-based auction for allo-
cating RaaS is presented in [41], where a certain amount
of resources is reserved for each MVNO. In addition to
the reserved resources, MVNOs can request for additional
resources dynamically to satisfy their users’ requirements.
2287
Each MVNO estimates the real-time resource demand accord-
ing to current achievable data rate and traffic demands.
Considering N MVNOs as the bidders and M BSs as the dif-
ferent types of commodities offered by a RaaS provider, the
WDP is formulated as an integer linear program as follows:

N
max vj xj
j=1

N
s.t. dij xj ≤ Ci , ∀i ∈= {1, . . . , M},
j=1
xj ∈ {0, 1}, ∀j ∈ {1, . . . , N} (42)
where vj is the valuation of MVNO j and xj indicates whether
MVNO j wins the bid or not. The fraction of resources
requested by MVNO j is denoted by dij and Ci represents the
maximum amount of resources offered by BS i. The authors
propose a greedy approximation algorithm to select the win-
ners and determine prices. The reserve prices of the MVNOs
ensure that the winning MVNOs do not pay any zero payment
and thus the RaaS provider’s profit is guaranteed.
2) VCG-Based Online Auction for C-RAN: The C-RAN
platform allows hosting a large number of virtual BS instances
in the cloud. Computing resources for baseband signal pro-
cessing are pooled as VMs that are placed in the cloud data
center. Within a C-RAN system, the base stations can be
flexibly shared among multiple entities by using an auction-
based virtualization technique. Reference [38] presents an
online auction model where the C-RAN resources are shared
among mobile operators through virtualization. This VCG-
based mechanism solves the WDP by using LP relaxation and
taking the fractional objective value of the social welfare. In
the online setting, the authors propose a randomized rounding
approach to learn future bids based on known bidding prices.
3) Hierarchical Auction for C-RAN in a Bayesian Setting:
When C-RAN resources are allocated to users via MVNOs, a
hierarchical auction model can be adopted as presented in [39].
A C-RAN operator sells spectrum resources among MVNOs
where the MVNOs assign the resources to serve their sub-
scribed users. This paper considers a two-level hierarchical
auction: the lower-level auction is between end users and the
virtual operators, and the higher-level one is between MVNOs
and the C-RAN operator. Both homogeneous and heteroge-
neous user demands are considered for the auction models.
In the lower-level auction, the optimal solution is obtained
under Bayesian setting where the virtual valuations of users
are determined based on their best response strategies that
maximize their profits. The authors propose a polynomial-time
greedy approximate algorithm to reduce the time complexity
in solving the allocation and price determination problems.
4) Online IaaS Auction in a Primal-Dual Framework: The
IaaS cloud system allows users to request customized bundle
of computing resources according to their real-time prefer-
ences. An online auction model can be used where the IaaS
provider can virtualize the infrastructure resources and sell
them to cloud users. Zhang et al. [40] propose an online
framework where the IaaS provider dynamically creates VMs
consisting of heterogeneous physical machines. This online
2288
auction is based on a primal-dual framework that maximizes
the social welfare considering the costs required for maintain-
ing the servers or VMs. In this auction model, the dual solution
to the allocation problem is determined by using the Fenchel
duality [82]. The Fenchel conjugates of the convex program-
ming relaxation provides detailed guidelines to analyze the
online auction model. The commonly used Lagrangean dual
problem can be considered as a special case of Fenchel dual-
ity. The Fenchel duality is applied to handle the convex cost
functions considering that the resource demands vary with time
and the same set of resources can be requested repeatedly. The
authors further extend the online auction model for expected
profit maximization using randomized reduction technique.
J. Auction-Based Virtual Network Embedding
The auction mechanisms can be applied for embedding the
virtual networks on to the physical substrate network and man-
aging the resource discovery, resource allocation, and mapping
the virtual links to the physical nodes based on the requests for
virtual links and nodes. An online auction is developed in [24]
which enables the InP to perform the embedding technique by
periodically selecting the VN requests that maximize the prof-
its. This solution approach takes the column generation-based
problem formulation and the branch-and-bound and rounding-
off heuristic algorithms. This embedding model also provides
methods to penalize the bidders with cheating tendency. A
consensus-based distributed auction for VN embedding is con-
sidered in [25] which runs periodically. In each round, bidders
exchange bids with neighboring physical bidder nodes and
then VNs are mapped to virtual links according to their agree-
ment policies. A bidder can request for virtual path linked
with single or multiple physical nodes in each round. The
distributed auction finally converges to a solution using the
pseudo-submodularity7 of the utility function.
K. Auction for Virtualization With Fairness Criterion
In WNV, MVNOs or SPs compete with each other to obtain
resources from InPs and satisfy their users’ QoS requirements.
Different users may have different data rate requirements.
Multiple InPs operating in the same area also compete with
each other to sell as much as resources to MVNOs or SPs. The
main objective of an InP is to maximize its revenue and dis-
tribute its available resources among MVNOs or SPs according
to their users’ requirements. On the other hand, MVNOs or
SPs want to obtain resources from InPs to serve their users
at a minimum cost. Different entities in the WNV frame-
work (e.g., users, MVNO, SPs, or InPs) have different fairness
perspectives.
1) Fair Allocation Among MVNOs/SPs: Fair resource allo-
cation in WNV refers to assigning MVNOs or SPs with
resources proportional to their users demands. The VCG
auction-based virtualization model presented in [22] parti-
tions and allocates the bandwidth resources of an InP among
SPs in an efficient and fair manner. The virtualization model
allows the SPs to derive their optimal bidding strategies, i.e.,
7 Pseudo-submodularity in auction corresponds to decreasing marginal value
of a bidder’s utility or payoff.
IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
exact bandwidth required to serve their users by a Q-learning
algorithm. Given the actual bandwidth resource requests or
bids submitted by SPs, the InP determines the allocation and
payment prices based on the VCG auction mechanism.
Given that the radio resources are already scheduled for
MVNOs, the LTE air interface virtualization model in [28]
proposes a two-stage power allocation algorithm to assign the
power resources among MVNOs. In the first stage, an initial
allocation of available power units is determined by the VCG
auction mechanism where the MVNOs submit bids on behalf
of their users. The initial allocation of MVNOs is adjusted in
the second stage via a cooperative game where users belong-
ing to the same MVNO form a coalition. A Shapley value
is considered as a user’s average payment in the coalition,
which is used to adjust the MVNO’s user rate requirements.
The readjustment of initial allocation is performed iteratively
based on the time-based proportional-fairness (PF) criterion.
A fair provisioning of radio resources as cloud services
among MVNOs in the radio-as-a-service (RaaS) model is
presented in [41]. The RaaS cloud service provider acts as the
auctioneer who runs the VCG-based auction to periodically
allocate the radio resources among the MVNOs’ according to
their real-time demands. To ensure fair pricing for resource
allocation, the auction model defines reserve prices so that
cloud SPs receive a payment which is greater or equal to a
threshold price.
2) Fair Resource Scheduling Among Users: In wireless
network environment, users requirements are highly vari-
able where fair resource scheduling means equal shares of
resources for users rather than equal bit rates. Fair scheduling
of resource blocks (RBs) among MVNOs and their users can
be ensured by an auction-based mechanism. A VCG-based
auction model is considered in [27] where the MVNOs sub-
mit their resource requests to the InP. The proposed allocation
algorithm prioritizes the MVNOs based on their users’ QoS
requirements and assigns the available RBs one-by-one to the
MVNOs accordingly. The mechanism explicitly guarantees
fairness among users within an MVNO by scheduling RBs for
a user as long as its requirement is satisfied. The remaining
RBs will then be assigned to other users inside the MVNO
whose rates are below the requirements. The allocation for
users within an MVNO will terminate when all users QoS
requirements are satisfied. This will ensure fairness among all
MVNOs.
3) Fair Market Revenue Among InPs: From a seller’s per-
spective, the InP needs to be able to earn a fair amount
of revenue for the resources it leases to the MVNOs. The
SDN-based WNV presented in [32] considers a double auc-
tion model to enable multi-flow transmission among multiple
InPs and multiple MVNOs. The auction mechanism guaran-
tees fairness among InPs by defining a target sell or minimum
allocation criterion for each InP. The allocation also satisfies
the MVNOs’ data demand constraints according to their users’
rate requirements.
In the WNV business model, a fair negotiation process
needs to be ensured among the sellers and buyers such that the
overall cost of both parties is minimized. An online auction-
based on-demand service negotiation model is proposed
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS 2289

TABLE VI
C OMPARISON A MONG AUCTION M ODELS IN WNV

in [26], which provides a mutually beneficial contract among
InPs and SPs. This mechanism aims to minimize the costs
involved in partitioning the resources into VN slices and
embedding them onto the physical substrate network. In this
auction model, both InPs and SPs submit their ask bids and
buy bids according to their bidding preferences, respectively.
A package-based bidding strategy is adopted which is an
weighted average of heterogeneous resources based on the
proportional cost of each type of resource.
V. AUCTION A PPROACHES IN WNV: L ESSONS L EARNED
WNV provides the foundation for rapid innovation of new
wireless services and their flexible implementation in future
generation wireless networks. It also encourages the develop-
ment of new business solutions for network sharing to reduce
the capital and operational expenditures as well as to make
additional revenues by leasing the network resources for a
limited time. The virtualization motivates service providers
with limited physical resources to join the market and to
implement new services on the shared network architecture.
Auction mechanism design provides the guidelines to enable
multiple business entities (e.g., MVNOs, SPs, cloud providers)
to coexist within the same infrastructure with efficient resource
allocation and payment rules.
There are several approaches to design auction-based vir-
tualization model in wireless networks. Table VI presents a
comparison among existing auction-based virtualization mod-
els in terms of auction classification, objective, and economic
properties.
For practical deployment of virtualization in wireless
networks, an online auction mechanism will be useful to vir-
tualize the network resources in both access and core network
where the users will be served on-demand manner based on
their real-time requirements. In SDN/NFV-based 5G wireless
networks, the auction-based virtualization model will need
to manage the allocation of heterogeneous types of network
infrastructure and radio resources as well as network func-
tionalities and cloud-based services across the access and core
networks. The dynamic and flexible network-wide virtualiza-
tion can be designed based on combinatorial auction where
the MVNOs or SPs can submit bids on a combination of
commodities according to their QoS requirements in terms
of bandwidth and latency. The online combinatorial auction
2290 IEEE COMMUNICATIONS SURVEYS & TUTORIALS, VOL. 20, NO. 3, THIRD QUARTER 2018
model can be extended with double-sided auction framework
in order to enable a fair competition among InPs and MVNOs.
In the double auction framework, multiple InPs and MVNOs
can submit their ask bids and buy bids to the auctioneer
according to their preferences, respectively. The InPs aim to
sell as much as resources or services to MVNOs with the
objective of maximizing their revenue, whereas the MVNOs
want to buy resources or services with the objective of mini-
mizing their allocation cost (i.e., maximizing utility or payoff).
Therefore, the allocation problem formulation also needs to
take care the fairness criteria for InPs and MVNOs such that
each InP can sell a fair amount of resources and each MVNO
can get a fair portion of resources from the InPs.
Considering the complexity issues in solving the winner
determination problem (WDP) of an online double-sided com-
binatorial auction model for virtualization as discussed above,
finding exact solutions could be computationally inefficient.
A heuristic greedy allocation algorithm can be designed to
assign the resources in an computationally efficient manner.
The heuristic algorithm can also be improved with additional
fairness criterion for different entities in WNV (e.g., InPs,
MVNOs, SPs, users) according to the system model. In real
applications, the online auction will be performed periodically
at certain interval when the auctioneer will collect the ask bids
and buy bids from InPs and MVNOs respectively. An iterative
primal-dual approach can be adopted to handle the complex-
ity issues using duality theory and estimate bidding strategies
for InPs and MVNOs for the next round of auction based on
online learning algorithms. For such online auction with uncer-
tainties in bid values, randomized rounding technique can be
applied to round off the optimal fractional solution and guaran-
tee truthfulness in expectation. Although auction mechanisms
are designed in virtualization to achieve economical efficiency,
most of the works do not analyze the economic properties of
the auction methods. In particular, none of the mechanisms
considers the budget balance property.
VI. O PEN R ESEARCH I SSUES AND F UTURE D IRECTIONS
The development of virtualization applications in 5G
networks will need to handle several research challenges.
In this section we will discuss some of the open research
issues and future directions based on auction mechanisms for
virtualization in wireless networks.
A. Dynamic Allocation of Network-Wide Resources
The existing auction-based virtualization models mostly
handle the allocation of wireless physical infrastructure and
radio resources within the radio access network. Some recent
works have applied virtualization technique to abstract com-
putational resources in the core network. The auction based
virtualization framework has a wide range of opportunities
to increase the resource utilization by jointly virtualizing
infrastructure and computational resources across the access
and core networks as a single service or application pack-
age. Network-wide resource slicing and sharing in a 5G
network would bring additional challenges due to the multi-
dimensional heterogeneity of network resources such as radio
spectrum, bandwidth, computing and storage devices spanning
from the access to the core networks.
SDN and NFV-based architecture has the potential to deploy
such network-wide virtualization. SDN supports flow level
virtualization which enables multi-flow transmission over dif-
ferent RANs. NFV can be integrated to virtualize operational
functionalities of different processing units, storage units, and
gateway devices as VNF service chains. The network-wide
auction based virtualization can be implemented via a cen-
tralized SDN controller where heterogeneous user demands
are modeled using an online combinatorial auction frame-
work. In the online setting, users are served in an on-demand
manner according to the users’ QoS requirements. To evalu-
ate the quality of virtualized services and profit gain at the
user end, new valuation and utility function models need to
be investigated in the context of combinatorial auctions.
B. Virtualizing Everything-As-a-Service
In the SDN/NFV enabled 5G network, virtualization
technique has the flexibility to virtualize various devices
and network functions as services or applications over the
network. This motivates virtualizing everything-as-a-service
which include virtualization of traditional RAN infrastructure
and radio resources as well as computing and storage devices
in the cloud data centers. In addition, virtualization can be
applied on mobile edge computing and caching functional-
ities for the low-power devices deployed in IoT or mobile
edge networks. The computational and caching resources in
the edge or IoT cloudlets can be virtualized and shared among
different cloud service providers and mobile user ends using
auction mechanisms. The main challenge in this auction based
virtualization process would be choosing the cloud SPs for
users according to their preferred bundle of services from
multiple SPs. The performance of virtualization can be ana-
lyzed in terms of computational overhead, power consumption,
energy efficiency using suitable utility functions of the auction
model.
C. Service-Centric Virtualization Mechanism
A dynamic framework of virtualization is expected for next
generation wireless networks to meet users’ real-time demands
in an inexpensive way. The SPs who desire to provide short-
lived services, also look for dynamic and flexible network
architecture so that users’ access to the common pool of infras-
tructure resources is available on request. Therefore, the InPs,
SPs and users need to be modeled under a single framework
where users and SPs are served according to their hetero-
geneous QoS demands. Thus, InPs can accordingly slice the
physical resources into customized VNs and provide required
logical/physical connectivity. The InPs sometimes may need
to abstract network functionalities as VNFs through softwares
running on VMs in the cloud data centers. The management
of VNs and VNFs brings additional challenges to initiate
on-demand service or resource allocation and automated place-
ment of respective VMs/VNFs to the network nodes. Instead of
hardware or device-centric allocation, service-centric auction
mechanism needs to be investigated where various services are
HABIBA AND HOSSAIN: AUCTION MECHANISMS FOR VIRTUALIZATION IN 5G CELLULAR NETWORKS
considered as commodities. A complete service-centric man-
agement solution in the virtualization layer is still an open
research challenge in WNV.
D. Embedding VNs and VNFs for Virtualization
The integration of SDN and NFV into the virtualization
framework reduces the dependency on hardware devices and
support flexible implementation of newer services and tech-
nologies. This certainly reduces the CAPEX and OPEX signif-
icantly, but brings new challenges to economically deploy the
VNs and VNFs onto the network infrastructure in the dynamic
framework. In general, each virtual resource or service slice
is embedded as a VM running on a server machine. With the
increasing wireless traffic demand, the VM footprint would
become too large and it would not be cost-efficient to deploy
VM per VN or VNF. Therefore, cost-effective approaches for
the embedding process will need to be investigated.
E. Pricing Issues in Virtualization
The payment method for on-demand virtualized service pro-
visioning needs further analyses within a dynamic framework.
The online auction-based virtualization models consider the
pay-as-you-go concept where the SPs or users pay according to
their usage. The payment price is generally determined based
on VCG pricing. In some cases, the payments are determined
by learning game theoretic strategies that maximize users’ util-
ities. Efficient approaches need to be designed that benefit both
sellers and buyers in the auction model. To ensure that sell-
ers get a minimum revenue from the auction and to avoid the
zero payment scenario some auction models consider reserve
prices to avoid zero payment situation. Similarly, to guaran-
tee that the buyers receive required level of service with their
limited budgets, the pricing model should also consider bud-
get constraints in the auction mechanism and analyze their
strategic behavior since they tend to cheat to avoid running
out of money. This is to be noted that designing a computa-
tionally efficient auction mechanism which is simultaneously
incentive compatible, individual rational and budget-balanced
is still considered as an open research problem.
The pricing scheme in the auction-based virtualization
model should have the flexibility to adopt the competitions
among multiple sellers and multiple buyers. In the double auc-
tion setting, participating sellers (e.g., InPs, MVNOs or SPs)
need to determine the ask bid in way that they can successfully
sell their resources or services with significant profit gain. In
each round of online double auction model, the mechanism
should also allow determining bidding strategies according
to the objectives of sellers and buyers and updating pay-
ment prices respectively. The computational complexity will
increase further when the sellers and buyers need to determine
combinatorial bids over heterogeneous resources or services.
F. Security Issues in Virtualization
In the SDN/NFV-based network architecture, security is
crucial issue in the virtualization model. The SDN-based
virtualization controller should provide a trusted encryption
platform for communication between InPs and MVNOs. The
2291
SDN-controller should be able to protect bidders’ private
bidding information and locations so that other participating
bidders cannot rig the information and manipulate the auction
outcome. Furthermore, the isolation among the VNs should be
performed carefully such that applications running on a VN do
not have access to another VN. The SDN controller should be
self-protected, i.e., the SDN interfaces should define protection
policies for all different traffic types in order to restrict unau-
thorized resource requests. For example, the cloud computing
systems, a single server can be flooded with multiple requests
(i.e., DDoS attack) which disrupt the QoS of cloudlet services.
Therefore, various security protocols need to be installed at
the virtual controller for content filtering, authentication, load
balancing, etc.
VII. C ONCLUSION
The 5G cellular networks are envisioned to provide flex-
ibility, scalability, and reduced maintenance cost in network
operation and maintenance while guaranteeing very high data
rate and low latency to users. It is expected that 5G/B5G
systems will adopt virtualization to design the network archi-
tecture operating on logically isolated virtual network slices
and provide a wide variety of services on the same plat-
form. Wireless network virtualization supports the network
sharing business models which can be represented as mod-
els to jointly achieve allocation and economic efficiency. In
this paper, we have focused on auction approaches in WNV
to allow MVNOs or SPs to lease resources by submitting bids
on a common resource pool. The virtualization controller will
act as the auctioneer to allocate resource slices and collect
payment for resource usage. We have discussed the basics of
different auction models that are suitable for WNV. We have
reviewed the existing literature related to the auction-based
virtualization models. We have outlined some open research
challenges and future directions to implement network-wide
and service-centric allocation of virtualized network resources
and functionalities through the auction mechanism.
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2293
Ummy Habiba received the B.Sc. degree in elec-
tronics and telecommunications engineering from
North South University, Bangladesh, in 2010 and
the M.Sc. degree in telecommunication engineering
from East West University, Bangladesh, in 2012. She
is currently pursuing the Ph.D. degree in telecom-
munications engineering from the University of
Manitoba, Canada. Her research interests include
resource allocation in 5G and beyond 5G networks,
wireless network virtualization of infrastructure, and
wireless resources. Her current focus is on auction
mechanism design for spectrum and infrastructure sharing, mobile edge com-
puting, and software-defined networks. She was a recipient of Gold Medal
for obtaining the highest CGPA in the M.Sc. program and the University of
Manitoba Graduate Fellowship for the Ph.D. program.
Ekram Hossain (F’15) received the Ph.D. degree
in electrical engineering from the University of
Victoria, Canada, in 2001. He is a Professor with the
Department of Electrical and Computer Engineering,
University of Manitoba, Winnipeg, Canada. He is a
member (Class of 2016) of the College of the Royal
Society of Canada. His current research interests
include design, analysis, and optimization of wire-
less/mobile communication networks, cognitive and
green radio systems, and network economics. He
has authored/edited several books in the above
areas (http://home.cc.umanitoba.ca/∼hossaina). He has been the Editor-in-
Chief of the IEEE Press since 2018. He serves as an Editor of IEEE
W IRELESS C OMMUNICATIONS. He served as the Editor-in-Chief of the IEEE
C OMMUNICATIONS S URVEYS AND T UTORIALS from 2012 to 2016, an Area
Editor of the IEEE T RANSACTIONS ON W IRELESS C OMMUNICATIONS in
the area of “Resource Management and Multiple Access” from 2009 to
2011, an Editor of the IEEE T RANSACTIONS ON M OBILE C OMPUTING
from 2007 to 2012, and an Editor of the IEEE J OURNAL ON S ELECTED
A REAS IN C OMMUNICATIONS -C OGNITIVE R ADIO S ERIES from 2011 to
2014. He was a recipient of several research awards including the 2017
IEEE Communications Society Best Survey Paper Award, IEEE Vehicular
Technology Conference (VTC-Fall 2016) Best Student Paper Award as a co-
author, the IEEE Communications Society Transmission, Access, and Optical
Systems Technical Committee’s Best Paper Award in IEEE Globecom 2015,
the University of Manitoba Merit Award in 2010, 2014, and 2015 (for
Research and Scholarly Activities), the 2011 IEEE Communications Society
Fred Ellersick Prize Paper Award, the IEEE Wireless Communications and
Networking Conference 2012 (WCNC’12) Best Paper Award, the 2017 IEEE
Communications Society Technical Committee on Green Communications
and Computing Distinguished Technical Achievement Recognition Award for
outstanding technical leadership and achievement in green wireless commu-
nications and networking, and he was listed as a 2017 Clarivate Analytics
highly cited researcher. He was elevated to an IEEE Fellow “for spec-
trum management and resource allocation in cognitive and cellular radio
networks.” He is an elected Member of the Board of Governors of the IEEE
Communications Society for the term 2018–2020. He was a Distinguished
Lecturer of the IEEE Communications Society from 2012 to 2015. He is cur-
rently a Distinguished Lecturer of the IEEE Vehicular Technology Society. He
is a registered Professional Engineer in the province of Manitoba, Canada.