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An Evaluation Model on BcN Investment and Pricing Plan of ISP : Applications of Real Options and Monte Carlo Simulation

  • Informatization Policy
  • Abbr : 정보화정책
  • 2006, 13(3), pp.102-120
  • Publisher : NIA
  • Research Area : Social Science > Public Policy

Kim Dohoon 1 정한욱 2 방정희 2 박명선 2

1경희대학교
2KT

Accredited

ABSTRACT

Korea is hoping to solidify its leading position as a global IT leader by successfully establishing BcN. However, there are only a few studies underpinning the economic foundation for the success of BcN despite much progress in technical requirements. In particular, key policy issues such as pricing structure have witnessed no distinctive progress. This research reviews the impact that Internet pricing alternatives could have on the BcN investment based on Real Option Valuation and Monte Carlo Simulation. The simulation results imply that pricing policies, along with the uncertainties in BcN demand, deeply affect the profit structure and investment motivation of service providers. Furthermore, service providers are found to advance investment in BcN under a pricing structure where traffic volume is directly linked to revenues. These findings request a positive investigation on the dynamic efficiency that service providers could create by investing into the state-of-the-art infrastructure and leading service development. An effective charging scheme between ISP and CP should be developed so that it can create an environment where the BcN project is driven by voluntary, proactive participation of the service providers.

Citation status

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