Utility Infrastructures & Economic Restructuring

Utility Infrastructures & Economic Restructuring

. There has been a general movement in the 1980s and 1990s toward economic restructuring of utility infrastructures, ranging from telecommunications to electric-power generation and distribution. In general, this restructuring has been in a market-oriented direction. Where infrastructure functions were formerly state-owned activities, the tendency has been toward privatization. But even where utility services were already formally part of the private sector, as has generally been the case in the United States, restructuring has markedly emphasized permitting and encouraging a greater play to market forces such as competition in industries which were formally regulated monopolies or semi-monopolies.

In the United States, most infrastructure services have long been under private ownership, but operated as monopolies under close regulation with regard to rates and services. The opening of these infrastructure services to market competition is most familiarly typified by the breakup of the Bell System monopoly in the mid-1980s. Long-distance telephone service was separated from the seven regional “Baby Bells” that provided local service, and the long-distance market was thrown open to new competitors such as MCI and Sprint. The result, as is well-known, has been not only lower long-distance rates, but also an enormous expansion of the scope and variety of telephone services, including call-waiting and call-forwarding, voice mail, and an great proliferation of cellular phone networks. From the consumer’s point of view, the result has been a greater evolution of phone service in the past ten years than in the previous couple of generations.

More recently, marketization has been extended further, to the electric-power utilities. The United States has never had a single regulated electric monopoly, as it had a telephone monopoly, but local or regional electric utility companies were monopolies, normally under state regulation….

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