Satellite observations indicate that efficient energy transport among various plasma particles and between plasma waves and plasma particles is taking place in auroral ion beam regions. These observations show that two characteristic wave types are associated with the auroral ion beam regions: electrostatic hydrogen cyclotron waves with frequencies above hydrogen gyrofrequency, and low frequency waves with frequencies below hydrogen gyrofrequency. We speculate that the low frequency waves can be ion acoustic waves generated through the fan instability. The presence of a cold background ion component is necessary for the onset of this instability. A cold ion component has been directly observed and has been indirectly suggested from observations of solitary wave structures. The wave-particle interaction during the development of the fan instability results in an efficient ion beam heating in the direction perpendicular to the ambient magnetic field. The fan instability development and the ion beam heating is demonstrated in a numerical particle simulation. 23 refs, 16 figs.