Real options for investment decisions in mobile TV infrastructure

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, when to do so. We consider a realistic setting where the mobile TV network is mainly relying on a DVB infrastructure whose coverage can be complemented by the cellular network. As several actors may be involved in this service setting, we consider a dynamic game theoretical framework combining real option theory with coalition games. We consider two main sources of uncertainty: user demand and network operation cost. We then propose a novel a bi-level dynamic programming algorithm that solves the underlying maximization problem. Our numerical results illustrate the decisions of both actors and the impact of the system parameters and the degree of uncertainty on the investment dates.