A real options framework to value network, protocol, and service architecture

This paper proposes a real options framework for evaluating architectural choices and the economic value of these alternative choices of networks, protocols, and services. Using proven financial techniques of real options, our model explores the value of distributed architecture compared to the benefits of centralized control. Voice and email case studies that agree with our theory and model are presented. We apply our model to illustrate the value of end-to-end structure, why SIP-based VoIP is winning, and the value of open garden service business models allowing third parties to provide network services/applications. This work illustrates the potential of real options to help quantify the economic value of network, protocol, and service architectures. Categories and Subject Descriptors C.2.1 [Network Architecture and Design]: Distributed networks, Centralized networks. General Terms Management, Design, Economics, Experimentation, Standardization. Keywords Network architecture, real ...

• Type: Journal
• Year: 2004
• Where: CCR
• Authors: Mark Gaynor, Scott Bradner
• Keywords: CCR 2004, Economic Value, Real Options, Real Options Framework