• Defining affordability

The International Telecommunications Union (ITU) defines affordability by the cost of telephone ownership should not exceed a certain percentage of family income.  In general, the threshold level is between one and two percent of family income for those with telephone service.  This is an important factor for telecommunications policy makers when trying to set pricing-schemas and tariffs.  Unfortunately, "telephone service is not a commodity like food", where the costs of production are directly related to the wealth of the domestic economy.  The physical components of a telephone network are roughly the same in any country in the world.  It is suggested that policies be reviewed in the light of the difference between existing household penetration and those that theoretically could afford service.  The table below presents a comparison of Costa Rica's ability to pay for service to other Latin American countries.
 

	Private consumption income per household US$ 1995	Percentage of households with telephone service 1995	Percentage of households that could afford telephone service Threshold income: US$ 2,060 per year	Percentage of households that could afford telephone service Threshold income:  US$ 1,340 per year
Costa Rica	6,886	42.0%	80.0%	90.0%
Brazil	10,608	20.5%	70.0%	80.0%
Mexico	8,995	45.1%	80.0%	100.0%
Venezuela	13,748	41.8%	90.0%	100.0%
Chile	15,450	46.9%	100.0%	100.0%

                                                                                                                                                                *Source ITU¹³
The above table suggests that Costa Rica has more families that could afford telephone service than currently have it (see difference between 42% and 80%/90%).  The implication here is the relationship between how the government might control the average cost structure in the form of tariffs or the stock of telephone lines in relation to inefficiency, financial constraints, or market restrictions. (See Privatization and Deregulation for more info.)
 
• See also Telecommunications infrastructure for detailed listing and statistics on available services.

Forward to Government Policies
Return to The Information Technology landscape in nations around the world menu
Last updated December 18, 1998