A Game Theoretical Real Options Framework for Investment Decisions in Mobile TV Infrastructure

Amal Abdel Razzac, Linda Salahaldin (), Salah Eddine Elayoubi (), Yezekael Hayel () and Tijani Chahed ()
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Amal Abdel Razzac: Institut Mines-Telecom, Telecom SudParis, UMR CNRS 5157, Evry, France
Linda Salahaldin: Institut Mines-Telecom, Telecom Ecole de Management, Evry, France
Salah Eddine Elayoubi: Orange Labs, Issy-Les-Moulineaux, France
Yezekael Hayel: University of Avignon, Avignon, France
Tijani Chahed: Institut Mines-Telecom, Telecom SudParis, UMR CNRS 5157, Evry, France

Asia-Pacific Journal of Operational Research (APJOR), 2017, vol. 34, issue 04, 1-34

Abstract: This work presents a strategic investment framework for mobile TV infrastructure. We address the question of whether an operator should enter the mobile TV market and, if yes, how and when to do so. We perform a capacity and QoS analysis that shows that Mobile TV is not a simple added-on service but requires new planning strategies that need heavy investments. We consider two possible settings: a competitive mobile TV network where a digital video broadcasting (DVB) operator and a cellular network operator build their independent networks and a cooperative setting where the TV network is mainly relying on a DVB infrastructure whose coverage can be complemented by a cellular network. Two main issues alter the investment decision of the stakeholders, namely, the market uncertainty and the competition or the willingness of cooperation between the main technological players. We define a game theoretical real options framework and propose a novel bi-level dynamic programming algorithm that solves the underlying profit maximization problem. Our numerical results illustrate the optimal investment decisions of both actors and the impact of the system parameters as well as the degree of uncertainty on the investment dates.

Keywords: Mobile TV; LTE; DVB-NGH; investment decisions; uncertainty; cooperation; competition; real option; bi-level programming (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1142/S0217595917500142

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