ABSTRACT
This chapter presents an overview of Hungarian and Russian telecommunications policy as a case study in natural monopoly regulation in transitional economies. The characteristics of telecommunications service in transitional economies pose a number of special challenges for regulatory policy. In the centrally-planned economy, public telecommunications service was managed through a monopoly enterprise and developed at the discretion of national political entities. In any telecommunications service, levels of output are codetermined by the facilities, location, and overall configuration of the networks making up the telecommunications system. In Russia, public telecommunications services found little gain in the gradual reforms under perestroika in the second half of 1980s. In Hungary, the movement away from the inertial tariff setting of the earlier centrally-planned period began in the second half of the 1980s. In telecommunications, as in any industry, ownership structure, investment financing, and price policy are intimately related.
