ABSTRACT
This chapter looks at how the Soviet telecoms system handled price and output decisions and how it approached cost minimization. The Soviet system designers have always been misled by a notion that they had to distribute real income by manipulating pricing policy on the consumer-goods side of the relationship with households rather than by manipulating wage income. Full treatment of the economics of telecommunications in the Soviet system must await more research. The economics of network design is one of the central issues engaging the attention of any telephone utility company or a regulatory agency responsible for overall telecoms policy. The design of telephone networks and their components involves choices that have a large impact on the cost of constructing and operating the network and on the quality of the service provided to clients. The quality of design decisions obviously depends on the quality of traffic forecasting and planning.
