Many of you are old enough to remember when we got telephone service from the “phone company,” usually AT&T or one of its regional subsidiaries. It was a monopoly; we could choose them or not have a phone. In Europe, phone service in most countries was a government monopoly, usually combined with the postal service.
In the monopoly phone environment, the phone company owned the telephone in your house, the wires, the central-office switches, and the long-distance communication infrastructure. Because they were a monopoly, they were regulated. Government entities determined their prices, guaranteeing them a minimum return on their investments. Not only was there little motivation for innovation; the regulatory process made it very difficult to experiment with different service models. Once the telecom market opened up (was “deregulated”) in the 1980s, all that changed. Now you can go down to your local big-box store and buy a telephone, and hook it up yourself. Competing companies now offer cellular and long-distance services under a variety of plans.
The electric power industry in much of the U.S. is in the same situation as the telecom business in the 1970s. Exceptions are Texas, Oregon, Illinois, and much of the Northeast. Most of Europe has already opened up retail markets, starting with U.K. and Scandinavia. In an open market, the owners of the wires (like St. Croix Electric and Dairyland) remain as regulated monopolies, and are obligated to provide transport capacity to any retailer who wants to offer service in an area.
Although not all the open markets are working well at this point, the existing utilities are very much opposed to open retail markets, because they lose their guaranteed returns and suddenly have to deal with the fallout of bad investment decisions. Some of the large investor-owned utilities in Europe have been hit hard by this.
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