Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency
1 January 1999
By Dr. Agustin Ros
In the hope of improving the performance of their telecommunications industry, some countries have implemented reforms such as privatization and permitting competition. Using newly released data from the International Telecommunications Union (ITU), Dr. Ros finds that during the 1986-1995 time period main lines per 100 inhabitants and growth in main lines per 100 inhabitants were approximately 31 and 129 percent higher in those countries that have privatized. While competition in basic service was not significantly correlated with network expansion, both it and privatization were positively correlated with main lines per employee.
The data indicate that while countries that privatize their networks and prohibit competition in basic service may not experience lower network expansion than they otherwise would if they had also permitted competition, there are likely to be technical efficiency losses from prohibiting competition. Finally, the data indicate that higher residential monthly subscription prices lead to higher main lines per 100 inhabitants and growth in main lines per 100 inhabitants.
This report was published in the Journal of Regulatory Economics, Vol. 14, No.1, January 1999.
