This project was motivated by the unsatisfactory status of the telecommunications infrastructure and services in the countries of Eastern Europe before the start of the transformation process.
Experts and representatives of industry feared that if far-reaching measures were not quickly applied, the absence of communications facilities would compromise the success of the transformation process even before it got underway.
Telecommunications was in fact of great significance for former Eastern Europe: it encourages the necessary division of labour, replaces or supplements central allocation mechanisms through decentralised horizontal communication, and is essential for the development of institutions (such as the capital market) and for attracting foreign capital. In spite of this high priority, the development has not been backed by government funding in any of the countries studied (Poland, Hungary and the Czech Republic). On the contrary, attempts have been made to establish a suitable framework for this sector, which was regarded as largely self-supporting. Macro-economic factors (debt, privatisation strategies, etc.) played a major role in the elaboration of specific development strategies.
Regulatory aspects proved to have the greatest impact on development of the three levels explored in the analytical part of the study - regulations, tariff policy and technical options. It was found that regulatory instruments which aim at passing on productivity advantages or which create conflicts of interest between the regulating bodies and the regulated utilities were not to be recommended in the phase of transformation. The much discussed question of optimum market organisation (monopoly versus liberalisation) proved to be less important than had been assumed. Generally, the development strategy pursued in the Czech Republic was found to be successful. Realistic regulatory alternatives only existed at a very early stage or later on only in isolated areas (such as the opening of local networks, the timetable for privatisation of SPT Telecom, or the tariff policy).
The report is supplemented by an empirical survey of the telecommunications sector in the Czech Republic.
12/1994 - 12/1995