Traditionally, in order to extend communications facilities into previously unserved or underserved rural and suburban areas governments in South America initiated projects to encourage private companies to enter those markets through incentive subsidies. The objective was to install telephone lines. Today however, research shows that (1) the link between ICT and economical as well as social development is crucial to a country’s evolution and (2) technological advances make telephone lines if not obsolete, certainly too low of capacity and too expensive to provide unified voice, data and internet access. This thesis describes the technological changes and recommends new strategies and policies for their implementation in Peru. What can be learnt from Peru could be translated into other countries.

These recommendations include (1) advocating for an active role of different entities in the market to help provide universal access in unserved or underserved areas, (2) establishing strategic alliances with traditional companies as well as encouraging the participation of local villagers, and (3) making some regulatory changes necessary to improve universal access.

In order to do so, governments conduct auctions using the reverse bid mechanism; through this process, the company with the lowest bid gets seed capital to start providing telecommunications services to the underserved areas specified on the tender’s documents. The money allocated for these projects comes from each country’s Universal Service Fund (USF), money raised through a fee charged to telecommunications companies who, in their turn, translate this cost to their customers. This methodology has proven to work at the beginning of the project, where winners of the auctions deploy the systems to provide the offered telecommunications services. However, in the middle run these companies, generally foreigners to the areas to serve, lose interest as the subsidy becomes smaller with time.

An alternative approach would be for the traditional private companies to select the areas they find attractive to provide telecommunication services and ask for a direct subsidy to the government; nonetheless, if solely left to the traditional companies’ initiative, several towns would end up unattended.