Policy Research Reports

Welfare Effects of Institutional Reform in Public Utilities: The Case of Voice Telecommunication in Egypt


PRR 36


October, 2012


L. Industrial Organization

I. Health, Education, and Welfare

Many countries, including Egypt, have undergone significant utility sector reform since the 1990s. This case study assesses the institutional reforms initiated in 1997 in Egyptian telecommunications, ending 40 years of state dominance over the sector. Reforms included (1) regulatory reform to strengthen the framework of accountability for the utility operator, (2) liberalization through lifting legal monopoly restrictions, (3) privatization (private sector participation) to insulate the utility from political interference in daily management and (4) public sector reform to enhance the utility’s managerial and financial autonomy. The examination of welfare effects is based on an analysis of the causal chain of reform, which highlights the interdependence of the main market players: Telecom Egypt, Vodafone, MobiNil and Etisalat and the regulator, National Telecommunication Regulatory Authority (NTRA). We had initially planned to include civil aviation and electricity in addition to telecommunications. However, faced with significant data-related problems we decided to restrict ourselves to telecommunication, with a focus on voice services. Even then, simple data such as a time series of tariff structure (i.e. call prices) and total minutes (call duration), especially for the national incumbent—Telecom Egypt—could not be obtained. We had to resort to gaining access to data through personal connections rather than through a well-functioning institutional setting. We’d like to take this opportunity to call for a National (though not necessarily public) Plan for Data Unification, Accuracy and Access, according to which universal data standards are applied, historical time series databases are established and data are made available to researchers.
Welfare Effects of Institutional Reform in Public Utilities: The Case of Voice Telecommunication in Egypt

Research Fellows

Amirah El-Haddad

Senior Economist, German Development Institute and Professor...