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Optimal 3G Telecommunication Service Switching Time Considering Telecommunication Quality of Service  

Lee, Jong-Ryong (College of Business Administration, Seoul National University)
Choi, kang-Hwa (Division of Management, Hansung University)
Kim, Soo-Wook (College of Business Administration, Seoul National University)
Publication Information
Journal of Korean Society for Quality Management / v.36, no.3, 2008 , pp. 76-86 More about this Journal
Abstract
This paper examines when a consumer in existent telecommunication 2G applies to new telecommunication service 3G from the viewpoint of an option pricing theory. To improve telecommunication quality of service, the consumer applies to 3G. The application means an exchange of 2G for 3G with extra costs such as searching and conversion costs. Since the option to exchange is a right that the consumer can exercise or not, application to 3G is deemed an exercise of the option to exchange at most suitable value of the option. The timing to exercise the option depends on the extra costs and the additional communication benefit from new telecommunication quality of service. These affect an optimal timing to apply to 3G. The optimal applying or switching timing to 3G is when an economic value of the option to exchange is equal to an economic value of the extra costs plus the additional telecommunication quality from new telecommunication service. The option analysis used in this paper is applicable to various industries.
Keywords
New Telecommunication Service(3G); Telecommunication Service Quality; Real Option; Option to Exchange; Service Switching Timing;
Citations & Related Records
Times Cited By KSCI : 2  (Citation Analysis)
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