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Universal(ly bad) service - providing infrastructure services to rural and poor urban consumers

  • Clarke, George R.G.
  • Wallsten, Scott J.

Until recently, utility services (telecommunications, power, water, and gas) throughout the world were provided by large, usually state-owned, monopolies. However, encouraged by technological change, regulatory innovation, and pressure from international organizations, many developing countries are privatizing state-owned companies and introducing competition. Some observers worry that even if reforms improve efficiency, they might compromise an important public policy goal-ensuring"universal access"for low-income and rural households. The authors review the motivation for universal service, methods used to try to achieve it under monopoly service provision, how reforms might affect these approaches, and the theoretical and empirical evidence of the impact of reform on these consumers. Next, using household data from around the world, they investigate empirically the historical performance of public monopolies in meeting universal service obligations and the impact of reform. The results show the massive failure of state monopolies to provide service to poor and rural households everywhere except Eastern Europe. Moreover, while the data are limited, the evidence suggests that reforms have not harmed poor and rural consumers, and in many cases have improved their access to utility services. Nevertheless, because competition undermines traditional methods of funding universal service objectives (cross-subsidies), the authors also review mechanisms that could finance these objectives without compromising the benefits of reforms.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2868.

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Date of creation: 31 Jul 2002
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Handle: RePEc:wbk:wbrwps:2868
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  1. Ros, Agustin J, 1999. "Does Ownership or Competition Matter? The Effects of Telecommunications Reform on Network Expansion and Efficiency," Journal of Regulatory Economics, Springer, vol. 15(1), pages 65-92, January.
  2. Onwumechili, Chuka, 2001. "Dream or reality: providing universal access to basic telecommunications in Nigeria?," Telecommunications Policy, Elsevier, vol. 25(4), pages 219-231, May.
  3. Alcazar, Lorena & Abdala, Manuel A. & Shirley, Mary M., 2000. "The Buenos Aires water concession," Policy Research Working Paper Series 2311, The World Bank.
  4. Rosston, G.R. & Wimmer, B.S., 2000. "The "State" of Universal Service," Papers 99-018, United Nations World Employment Programme-.
  5. Antonio Estache, 1994. "World Development Report: Infrastructure for Development," ULB Institutional Repository 2013/44144, ULB -- Universite Libre de Bruxelles.
  6. Hank Intven, 2000. "Telecommunications Regulation Handbook," World Bank Publications, The World Bank, number 15249, June.
  7. Wolak, Frank A., 1996. "Can universal service survive in a competitive telecommunications environment? Evidence from the United States consumer expenditure survey," Information Economics and Policy, Elsevier, vol. 8(3), pages 163-203, September.
  8. Chisari, Omar & Estache, Antonio, 1991. "Universal service obligations in utility concession contracts and the needs of the poor in Argentina's privatization," Policy Research Working Paper Series 2250, The World Bank.
  9. Clarke, George R. G. & Menard, Claude & Maria Zuluaga, Ana, 2002. "Measuring the Welfare Effects of Reform: Urban Water Supply in Guinea," World Development, Elsevier, vol. 30(9), pages 1517-1537, September.
  10. Rosston, Gregory L. & Wimmer, Bradley S., 2000. "The 'state' of universal service," Information Economics and Policy, Elsevier, vol. 12(3), pages 261-283, September.
  11. Milton L. Mueller, 1997. "Universal Service," Books, American Enterprise Institute, number 53006, 6.
  12. Geoffrey Cannock, 2001. "Telecom Subsidies : Output-Based Contracts for Rural Services in Peru," World Bank Other Operational Studies 11384, The World Bank.
  13. Chisari, Omar & Estache, Antonio, 1999. "The Needs of the Poor in Infraestructure Privatization. The Role of Universal Service Obligations. The Case of Argentina," UADE Textos de Discusión 3_1999, Instituto de Economía, Universidad Argentina de la Empresa.
  14. Menard, Claude & Clarke, George, 2000. "A transitory regime : water supply in Conakry, Guinea," Policy Research Working Paper Series 2362, The World Bank.
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