The liberalization of the telecommunications sector: the case of Latin America.

Abstract

The liberalization of services that were formerly organised as monopolies implies threats and opportunities. On one hand, income inequality and the existence of rural areas where access to communications is difficult usually imply that rural population experiment difficulties when access to a network facility. This is a consequence of large sunk costs (which strongly depends on geography) and low service affordability (which is positively correlated with gross domestic product per capita). On the other hand, liberalisation should yields to better prices and access to a number of telecoms services. We present a model in which consumers’ capacity to access broadband Internet facilities is negatively correlated with the price charged by the network owner per consumption capacity unit.