Network liberalization and developing countries - The case of Chile

The opening of Chile's telecommunications infrastructure to private and foreign investment has led to a rapid modernization of the network and to improvements in universal service. in 1994 all remaining regulatory entry barriers to the local, long-distance and international markets were removed for both service providers and network operators. Full digitization of switches and specific characteristics of the Chilean network structure have led to fierce price competition in the market. In spite of the small market size the strategic behaviour of the main market players is unlikely to succeed. As a result the market is likely to remain highly competitive. While the liberalization process has so far spurred the universal service goal, further improvements will mainly depend on whether entry takes place in the local market.