Brazil's 1998 privatization of Telebras, the state-run phone
monopoly, may not have led to a blossoming of competition, low
rates and burgeoning innovation, but it has helped the
companies that took over the incumbent's regional operating
companies. The government split Brazil into several regional
and long distance franchises, and sold each one to a different
operator. To ensure competition, it banned those companies from
offering cellular or long distance services, or allowing any
changes in ownership for five years. The result is that the
half dozen companies that now dominate the telecom industry
compete little with each other. "Mirror" franchises the
government sold to compete...
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