DocumentCode :
580206
Title :
Risk-hedging using options for upgrading investments in mobile networks
Author :
Morlot, Frédéric ; Elayoubi, Salah Eddine ; Redon, Thomas
Author_Institution :
Orange Labs., Issy-Les-Moulineaux, France
fYear :
2012
fDate :
9-12 Oct. 2012
Firstpage :
263
Lastpage :
272
Abstract :
In this paper, we illustrate how a mobile network operator can plan an upgrading investment to anticipate explosions of the traffic demand, taking into account the expected generated profit and the customers satisfaction. The former parameter grows with the demand, whereas the latter sinks if the demand is too high as individual Quality of Service (QoS) may collapse due to capacity saturation problems. In addition to that, as the equipment price decreases with time, it may be interesting to wait rather than to invest at once. Taking into account this trade off, we propose a real option strategy to hedge against the risk that the investment has to take place earlier than expected. At last, we price this option with a backward dynamic programming approach, using recent improvements based on least-squares estimations.
Keywords :
dynamic programming; least squares approximations; mobile radio; pricing; quality of service; telecommunication industry; telecommunication traffic; QoS; backward dynamic programming approach; capacity saturation problem; customer satisfaction; least-squares estimation; mobile network; profit generated; quality of service; risk-hedging; traffic demand explosion; upgrading investment; Indium tin oxide;
fLanguage :
English
Publisher :
ieee
Conference_Titel :
Performance Evaluation Methodologies and Tools (VALUETOOLS), 2012 6th International Conference on
Conference_Location :
Cargese
Print_ISBN :
978-1-4673-4887-4
Type :
conf
Filename :
6376333
Link To Document :
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