ow authority, such as a government agency, then it is less likely to base as suppliers compete to gain marginal revenue. these tariffs on costs than if it is driven to do so by competition. 2. Labour is generally cheap in developing countries, so the greater installation, maintenance and operational costs which 11.4.4 Developing countries are associated with older technologies is not a great disadvant- The greatest problem within developing countries, especially if they 3. The greater simplicity and lack of advanced services in the are a large agricultural country, is economic investment within their older technologies does not present a disadvantage since the telecommunication infrastructure. The cost of introducing new tele- prime requirement is for basic services. phone lines in rural areas is five times greater than in urban areas (ITU, 1986). Two thirds of the world do not have access to telephone 11.4.5 Competition services (ITU, 1988a) and 15% of the population own 85% of the telephone sets world-wide. Telephone densities in industrial coun- The powerful influence which competition has in determining the tries exceeds 45 per thousand inhabitants, whilst in developing economic environment within telecommunications has already countries it is less than one per thousand inhabitants. been covered in the previous sections. Competition can be benefi- The problem is that in developing countries telecommunications cial in forcing suppliers to become more efficient, so reducing costs is only a part of the country's overall infrastructure, competing for and prices. It can also be destructive when competitors concentrate scarce funds with other essential services such as post, transport and on the most profitable areas of service provision, so ignoring the power. The amount of investment possible is closely related to the other markets, allowing the prices in these areas to rise. GNP of the country and there is a good correlation between the In a non-competitive market there is very little price elasticity. telephone