An open-access market for global communications

Abstract

An open-access market design is presented to manage network congestion and optimize network use and value. Open access eliminates the walled-garden approach; instead, it commoditizes communications network capacity while decentralizing access to a transparent wholesale market. It ensures that scarce capacity is put to its best use by providing a platform for efficient trade. The market operates without friction using flow trading. It allows participants to bid persistent piecewise-linear downward-sloping demand curves for portfolios of products, gradually adjusting positions toward targeted needs. Flow trading allows fine granularity of products in time and location, creating complete markets. Liquidity and computational feasibility are maintained despite trading millions of interrelated forward and real-time products. Participants manage risk and adverse price impact through trade-to-target strategies. The market operator clears the market every hour, finding unique prices and quantities that maximize as-bid social welfare. Prices, aggregate quantities, and the slope of the aggregate net demand are public. The market operator observes positions, enabling it to optimize collateral requirements to minimize default risk. Priority pricing is used to manage real-time imbalances. An application of the model is developed for intersatellite wholesale communications with optical (laser-beamed) mesh networks in space, showing several efficiency gains.