Summary

• A decade of reforms
• The mobile juggernaut
• Internet heads South
• Performance evaluation
• The rise of telecom regulators
• Enhancing sector efficiency

Tables

• Table 1
• Table 2
• Table 3

One finding from this "lowest subsidy" approach is that, in some cases, low-income communities and rural and remote areas have greater purchasing power than was expected.

Privatization and the rise of competition in the region brought about considerable transformation of the economics of the sector. Tariff rebalancing, for example, has become pervasive and most countries in the region are in the process of, or have completed, rebalancing in their national markets. Price rebalancing has been triggered by a number of factors such as direct competition or pressures exercised by indirect competition from a number of new technologies and services—such as call back, refile, Internet telephony, and so on—that bypass the services of the incumbent operator.

There is also the political and economic pressure exerted by dominant players in the global telecommunications marketplace—such as the Benchmarks on international accounting rates imposed by the United States Federal Communications Commission. The Benchmarks impose a cap on the per minute settlement rate that US carriers can pay their foreign correspondents. Some of the countries in the region have fallen into line with US demands. But the majority of countries, while reducing their rates, have not met the benchmark levels. Some of these countries, such as Argentina and Colombia have been ‘punished’ by US carriers that have routed increasing volumes of traffic to those countries via refile or routes which bypass the accounting rate mechanism, such as the Internet (see Figure 5). At the level of settlement rates that prevailed in 1998, the losses incurred by Argentina and Colombia from bypass traffic were over US$ 60 million for each country.

Looking to the future, there are a number of new challenges regulators will face, notably in the new round of World Trade Organization services negotiations, the licensing of spectrum for additional mobile operators and in managing the transition to a competitive market.