Policy mandates and their efficacy in restructuring telecommunications: The transaction cost approach applied to an international study

This dissertation examines institutional factors that bring about successful telecommunications reforms. Observing market complexities and incompleteness in telecommunications, it argues for the indispensableness of policymaking to improve business environment. Telecommunications reforms, such as privatization and competition, are initiated to reduce market hazards for firms during service provision. However, reforms will not be successful without credible commitments by governments. Firms will underproduce to avoid losses from stranded assets if restructuring entails policy uncertainty.; The dissertation proposes three institutional designs to establish governments' restructuring credibility: separating and privatizing national telecommunications, ratifying competition, and specifying restructuring schedules. It provides statistical measurements of the impacts of institutional changes on international telecommunications. The study finds that telecommunications performance, as indicated by reduction of waiting lines for telephone service, is improved by simultaneous introduction of three institutional designs and competition in the long distance market.; The dissertation continues to devise credible policy options of privatizing and liberalizing telecommunications. Due to investment uncertainty, potential investors are less willing to purchase the shares of privatized telecommunications. The statistical analysis asserts that monopoly granted to the privatized firm for a limited concession period increases the investors' expected payoffs and their willingness to participate in shareholding. A full privatization is more likely to take place.; The econometric study also demonstrates that interconnection regulations, such as mandating numbering portability and regulators' arbitration upon request, save coordination efforts and information costs for market entrants to access to incumbents' networks and raise their expected returns from providing competitive services. As the entrants have a higher willingness to provide the services, telecommunications competition becomes more feasible and sustainable.; The dissertation concludes that the success of telecommunications reforms relies on carefully-designed institutions that reduce investment uncertainty for firms. The study of telecommunications restructuring roots its academic foundation in transaction cost theory. It answers the research inquiry by performing statistical analyses on international telecommunications with respect to transaction cost savings. The study suggests a policy solution for public service production that government provides non-market safeguards for firms against market hazards. Government (hierarchy) collaborates with the market to promote telecommunications development.