Real Options in Telecommunication Network Evolution Economics

This document describes ongoingwork to be performed on a research project during the period 16 September 2002 through 15 September 2003. In subsequent sections we provide background information for the project taken from the research proposal and present some ideas that were sent recently in a progress report to the providers of the research funds. The goals of this research project are: (1) to provide Sprint and Nortel Networks with a usable valuation model for making decisions related to the evolution of the telecommunication network, and (2) to expand the existing base of academic research related to valuation of real options. By using real data and opportunities to accomplish (1), we can determine general techniques that can be published to help accomplish (2). This document contains preliminary results and is intended to accompany a presentation scheduled for January 24, 2003 in the Finance Seminar at The University of Kansas School of Business. Do not quote, cite, or distribute without permission of the authors.