Dominant Players Become More So

Mar 1, 2004

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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