Competition and Telephone Penetration: An International Statistical
Comparison

Eric Kodjo Ralph
Graduate Telecommunications Program George Washington University

Jens Ludwig
Georgetown Public Policy Institute Georgetown University

Nations across the world have chosen vastly different regulatory
regimes under which telephony is supplied. The paper examines
this natural experiment using a fixed effects approach to determine
the impact of competition on the provision of telecommunications
services. Country-level panel data for both wireless and wireline
services from the ITU and individual country statistics for 70
countries since 1985 are used to test the hypotheses that increased
competition spurs telecommunications investment and market
penetration, and may complement rather than compromise universal
service goals. Preliminary results suggest this is so regardless
of the level of development of the country in question. In fact
this effect may be strongest for poorer nations.
Finally, economic theory suggests that enabling competition is not
synonymous with deregulation. Rather the benefits of competition
depend on whether countries regulate access to bottleneck facilities
controlled by dominant incumbents, in particular, on rules of
interconnection. We also attempt to test this by controlling for
different levels of access regulation.