Affordability of basic telephone service: an income distribution approach

Liberalisation usually requires price rebalancing. In low-income countries, this often leads to residential rentals being priced are much higher than before, which can threaten the affordability of basic telephone service. A quantitative model is provided for assessing the likely effects of price changes on affordability, using local data. Representative data from a range of countries are provided. Using illustrative parameters, the model is applied to show the effects on telephone take-up of economic growth, different pricing strategies, and different degrees of inequality in income distribution. It is also used to estimate price elasticities of demand for lines in low-income environments. (C) 2000 Elsevier Science Ltd. All rights reserved.