Strategic Technology Options in the Wireless Industry: A Case Study for U.S. Wireless Carriers

Abstract

The major U.S. wireless operators already have announced their plans for the evolution of their networks towards 3G, but some uncertainties remain, such as emergence of new technologies (WiMAX and WLAN) and the consolidation among operators (AT&T Mobile and Sprint Nextel). The article discusses a real option based model for technology decisionsand applies it to the U.S. wireless industry as a case study. We also discuss what decisions must be 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 (inter-generations migration scenario) is desirable (a positive net option value), but not desirable (a negative net option value) within generations (intra-generation migration scenario), in the U.S.