Title: A real options approach to decision making in broadband technology selection

Authors: Marco Araújo; Love Ekenberg; João Confraria; Mats Danielson

Addresses: Department of Computer and Systems Sciences, Stockholm University, P.O. Box 7003, SE-164 07 Kista, Sweden ' International Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361 Laxenburg, Austria; Department of Computer and Systems Sciences, Stockholm University, P.O. Box 7003, SE-164 07 Kista, Sweden ' Católica Lisbon School of Business and Economics, Palma de Cima, 1649-023 Lisboa, Portugal ' Department of Computer and Systems Sciences, Stockholm University, P.O. Box 7003, SE-164 07 Kista, Sweden; International Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361 Laxenburg, Austria

Abstract: The European Union has recently launched an ambitious plan to mitigate drastically, by 2025, the number of households lacking access to a 100 Mbps broadband connection through the subsidisation of the deployment of network infrastructure in rural areas. Decision makers such as governments and regulatory authorities therefore have to choose, among a pool of alternatives, a technology capable of delivering the required throughput on a large scale, based on a trade-off between the infrastructure costs and the subscribers' perceived utility for each alternative. Such a trade-off is not simple, since there is no straightforward manner to rank the subscribers' perceived utility against the network infrastructure cost. In this article, we propose a methodology based on real options, which outputs the value of each technology using multi-attribute value theory as an input, alongside the project's risk and its costs.

Keywords: broadband; real options; multi-attribute value theory; MAVT; MCDM; risk analysis; convenience yield; 5G; fibre to the home; FTTH; fibre to the cabinet; FTTC; G.Fast; DSL.

DOI: 10.1504/IJMCDM.2019.106917

International Journal of Multicriteria Decision Making, 2019 Vol.8 No.2, pp.184 - 210

Received: 02 May 2019
Accepted: 21 Aug 2019

Published online: 20 Apr 2020 *

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