This technical report provides a comprehensive analysis of the technical and financial parameters that have to be considered in formulating policies to reduce the disparities between urban and rural telecommunications services. It addresses the following fundamental issues regarding commercial provision of rural telecommunications services: a) The implications of the various sector reform models on rural telecommunications development; b) technology and cost trends; c) pricing and tariff setting options; d) commercial viability and revenue generation potential; and e) funding issues. Useful case study data were collected from more than 26 developing countries. The report also presents an array of options for commerical operation and challenges the general perception that rural telecommunications services are unprofitable. Services can be economically delivered to rural areas at affordable prices while at the same time providing reasonable financial returns to investors. A planning tool kit to assist in the design of the various options is also presented.