Abstract

The major US wireless operators already have announced their plans for evolution of their networks, but some uncertainties remain, such as emergence of new technologies (WiMAX and WLAN) and consolidation among operators (AT&T Mobile and Sprint Nextel). The paper proposes a real option based model for technology decisions and applies it to the US wireless industry as a case study. We also discuss what decisions are made, what the outcomes are, and how the options model is validated. The preliminary results show that the evolution of wireless network technologies between generations (intergenerations migration scenario) is desirable (a positive net option value), but not desirable (a negative net option value) within generations (intra-generation migration scenario).

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