Telecom Prices, Regulatory Reforms, Consumers’ Satisfaction: Evidence for 15 EU Countries

Abstract

We study the impact on consumers of privatization and liberalization in the telecommunication sector for 15 EU Countries. Policy reforms are summarized by the OECD regulatory indicators (REGREF), that consider the extent of privatization, vertical disintegration, and market entry. After controlling for other country variables, we first test the impact of ownership and regulatory changes on productivity and consumer prices. In a second step, we consider the Eurobarometer data on consumers’ satisfaction about quality and prices of the telecommunication service. The analysis confirms the importance of market regulation in reducing prices and increasing productivity performances, but minimize the role played by privatization per se. The latter and liberalization of the telecommunication market play a role in explaining the consumers’ satisfaction about prices and quality of the service, but country features are more important. Overall, our findings offer only mixed evidence, and somehow contradict, the hypothesis of welfare dominance across the EU of a unique reform paradigm in the telecom industry.

Keywords: telecom industry liberalization, privatization, impact on European consumers

JEL Classification: L32,L33,L96