A real options approach to decision making in broadband technology selection

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.