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Published by: Harvard Kennedy School
Published in: 1998

Abstract

When the administration of Peru president Alberto Fujimori embarks on an ambitious privatization program, it turns inevitably to the nation''s creaking telephone system. With but 2.5 phone lines per 100 persons, Peru, in the mid-1990s, had the lowest phone "density" in Latin America; installation of a new line took years, except via a thriving black market in existing lines. But the privatization committee which begins to plot the role of both the existing local and long distance phone monopolies, knows that it faces formidable obstacles to change: a suspicious and powerful military which nationalized the phone system in the 1970s; an influential cellular phone operator with his own agenda; existing unions, doubtful legislators who must approve a constitutional amendment to allow privatization to go forward. This case is about the political management of privatization. It describes the "interest group map" developed by the privatization committee and poses the question of what tactical approach should be taken with each. Case users must envision the potential conflicts, the objective desired, and the most useful tactics. The sequel describes the early success of the privatization process, after the phone system''s sale to the Spanish phone giant, Telefonica.

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Abstract

When the administration of Peru president Alberto Fujimori embarks on an ambitious privatization program, it turns inevitably to the nation''s creaking telephone system. With but 2.5 phone lines per 100 persons, Peru, in the mid-1990s, had the lowest phone "density" in Latin America; installation of a new line took years, except via a thriving black market in existing lines. But the privatization committee which begins to plot the role of both the existing local and long distance phone monopolies, knows that it faces formidable obstacles to change: a suspicious and powerful military which nationalized the phone system in the 1970s; an influential cellular phone operator with his own agenda; existing unions, doubtful legislators who must approve a constitutional amendment to allow privatization to go forward. This case is about the political management of privatization. It describes the "interest group map" developed by the privatization committee and poses the question of what tactical approach should be taken with each. Case users must envision the potential conflicts, the objective desired, and the most useful tactics. The sequel describes the early success of the privatization process, after the phone system''s sale to the Spanish phone giant, Telefonica.

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