Universal(Ly Bad) Service: Providing Infrastructure Services to Rural and Poor Urban Consumers

54 Pages Posted: 29 Jul 2002

See all articles by George R. G. Clarke

George R. G. Clarke

Texas A&M International University - A.R. Sanchez Jr., School of Business

Scott Wallsten

Technology Policy Institute

Date Written: July 19, 2002

Abstract

Until recently, utility services (telecommunications, power, water, and gas) throughout the world were provided by large, usually state-owned, monopolies. However, encouraged by technological change, regulatory innovation, and pressure from international organizations, many developing countries are privatizing state-owned companies and introducing competition. Some observers worry that even if reforms improve efficiency, they might compromise an important public policy goal - ensuring "universal access" for low-income and rural households.

Clarke and Wallsten review the motivation for universal service, methods used to try to achieve it under monopoly service provision, how reforms might affect these approaches, and the theoretical and empirical evidence of the impact of reform on these consumers. Next, using household data from around the world, they investigate empirically the historical performance of public monopolies in meeting universal service obligations and the impact of reform.

The results show the massive failure of state monopolies to provide service to poor and rural households everywhere except Eastern Europe. Moreover, while the data are limited, the evidence suggests that reforms have not harmed poor and rural consumers, and in many cases have improved their access to utility services. Nevertheless, because competition undermines traditional methods of funding universal service objectives (cross-subsidies), the authors also review mechanisms that could finance these objectives without compromising the benefits of reforms.

This paper - a product of Regulation and Competition Policy, Development Research Group - is a background paper for the Policy Research Report on The Regulation of Infrastructure. The authors may be contacted at gclarke@worldbank.org or swallsten@worldbank.org.

JEL Classification: H42, L32, L33, L50

Suggested Citation

Clarke, George and Wallsten, Scott, Universal(Ly Bad) Service: Providing Infrastructure Services to Rural and Poor Urban Consumers (July 19, 2002). World Bank Policy Research Working Paper No. 2868. Available at SSRN: https://ssrn.com/abstract=316179

George Clarke (Contact Author)

Texas A&M International University - A.R. Sanchez Jr., School of Business ( email )

5201 University Blvd.
Laredo, TX 78041-1900
United States

Scott Wallsten

Technology Policy Institute ( email )

409 12th St., SW
Ste 700
Washington, DC 20024
United States
2027309441 (Phone)

HOME PAGE: http://www.wallsten.net

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