A real options approach for prioritizing ICT business alternatives: a case study from broadband technology business field

Abstract

This paper provides a methodology for finding the optimum deployment strategy for information and communication technologies business activities in the context of initial infrastructure projects, which support a number of future investment opportunities. It treats these opportunities as real options (ROs) and assumes that there is a competitive threat that can influence them negatively, or even worse, eliminate their value. We take into account that the competitors’ rate of arrival and erosion of competitiveness, during the waiting phase for the ROs to invest, follow a joint-diffusion process with the investments’ revenues. The proposed methodology is applied to a real-life broadband technology business activity showing how it can be formulated and solved.

Keywords:

• decision analysis
• methodology
• investment
• telecommunications
• real options
• broadband investments