Evaluation of Telecommunication Policy and Industry Growth in Latin American Countries

This paper studies the telecommunication policies of four Latin American countries (Brazil, Chile, Costa Rica, and Mexico) to evaluate the impact of these policies on telecommunications industry growth. Each country’s telecommunications industry is characterized by consumer welfare (teledensity and the waiting list for a new telephone line), industry outputs (fixed lines, cellular subscribers), and capital expenditure. The main findings are that privatization is not the only approach to increase teledensity; the annual investment in the industry is proportional to annual telecommunications revenue when the industry is a state-owned monopoly; telecommunication policy makers take different approaches for each market segment; and that privatization and liberalization do not necessarily reduce service tariffs. These findings are important to industry stakeholders in making decisions that shape the future behavior of the industry.