Browsing by Author "Hussien, Abdulsemed"

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    Optimal Telecommunications Services Pricing
    (A.A.U, 1998-06) Hussien, Abdulsemed; Andre, Croppenstedt
    Cognizant with the importance of optimal pnCll1g as a guide to efficient resource allocation, this study was conducted to determine optimal prices for telephony services for selected urban areas in Ethiopia. To this end, a forward looking engineering economic technique of determination of incremental supply cost and the peak load pricing method were used to establish optimal telecommunications service prices that meet the broader national objective of efficiency in resource allocation and financial viability of the telecommunications operator. The finding that emerged in the effort is that the telephone network utilization ( traffic services) charges currently levied by the incumbent operator are well above the incremental cost, as derived in this study, of providing those services. Since network utilization services have greater sensitivity to prices, the distortions to efficiency and welfare loss are significant. These results have implications for pricing in telecommunications and other public utilities. That is policy makers need to adapt an optimal pricing strategy based on a forward looking engineering economic study of determining incremental costs. In parallel, policy makers need to review the sector organization and policy so that the wider objectives of efficiency in resource allocation and the financial viability and promotion of the telecommunications sector are achieved.