The Impact of the Regulatory Process and Price Cap Regulation in Latin American Telecommunications Markets
19 September 2003
By Dr. Agustin Ros
The transfer of state-owned telecommunications assets to the private sector has been a key element of telecommunications reform in many developing economies during the 1990s. Coupled with a more liberalized and competitive telecommunications market structure, privatization has generated economic benefits in developing and developed economies. Some of these benefits include: increased network expansion, reduced waiting time for network access, increased capital investment and improved operating efficiency. The benefits to the overall economy from a more developed and efficient telecommunications sector are considerable.
While policymakers actively pursued privatization and liberalization in many countries, an area that has received less attention is the establishment of independent regulatory agencies. Only recently have countries embarked down this path. With the exception of a few studies, our understanding of the impact that regulation has on telecommunications markets in developing economies is minimal. The significance of the regulatory process on sector performance is likely to be considerable.
In this article NERA Vice President Dr. Agustin J. Ros investigates the impact that the regulatory process and price cap regulation have had on telecommunications development in Latin America. Specifically, in addition to controlling for privatization and liberalization, he analyzes the impact that an "independent" regulator has had on the performance of the sector, going beyond previous studies to examine the impact that price cap regulation in particular has had on sector performance in Latin America.
