Closing the gap in access to rural communication: Chile 1995‐2002

Telecommunications reforms in Chile led to rapid development in the 1990s driven by the private sector, but rural areas remained largely excluded because of the high cost of providing service, low revenue potential, and lack of strategic interest to the operating companies. In 1994 the Government established a fund to catalyze additional private investment in payphone service in rural areas with low income and low telephone density. As a result, the proportion of Chile’s population living in places without access to basic voice communication decreased from 15 percent to 1 percent in 2002. Success was due largely to extensive reliance on market forces to determine and allocate subsidies, minimal regulatory intervention, simple and relatively expeditious processing, and effective government leadership. The design of the fund proved robust, and remains the leading example of a cost‐effective solution to reduce access gaps in basic communication in emerging economies.