Transformations of the State in Telecommunications

Since it became involved in telecommunications during the course of the nineteenth century, the state has played several roles in telecommunications: owner-operator, regulator, facilitator, and stopgap for private sector deficiencies. During the past two decades direct state involvement in telecommunications has been reduced, renewed demands for state intervention and a return of the state are currently made. This paper reviews the different roles of the state, weighs their advantages and shortcomings, and assesses the state's future involvement. Ownership and regulation have historically been considered as institutional alternatives to address problems of market failure and deficiency but they also have complementary functions. Likewise, the role of the state as facilitator and stopgap overlaps with these other roles and complements them. The experience with privatization and liberalization was brought into a new light by the recent economic crisis. It is unlikely that the state will return in a major role as an owner in telecommunications. However, the balance between private and state activity is being pragmatically realigned, resulting in a new mix of institutional arrangements that might better take advantage of the strengths of each