A History of Public Utility Regulation
Branko Terzic is a managing director at Berkeley Research Group, and a nonresident senior fellow of Atlantic Council’s Global Energy Center. He served as commissioner on the FERC, and on the Wisconsin Public Service Commission, and as CEO of Yankee Energy System, Inc.
Regulation in the past stifled innovation and delayed the introduction of new technologies. It did so by a failure to recognize obsolescence in existing technologies and a reluctance to respond with capital recovery policies appropriate to the new realities.
The time period was the 1980’s. The state and federally regulated industry was the telecom industry. Entering the 1980’s, the existing telephone operating technology was based on analog and electro-mechanical equipment, while the new technologies were electronic and digital.
The upshot was that rural and suburban America received the new digital enabled services of call forwarding, call waiting, and caller ID before customers of the Bell System, which had developed the transistor and much digital technology. Rural and suburban America was served by the independent telephone industry rather than by the Bell System, run by the dominant national giant AT&T and its subsidiaries.
Rural and independent American telephone companies went from the step-by-step switching equipment and rotary dial telephones of the 1920’s. Skipping two generations of electro-mechanical cross-bar and mini-cross-bar central office switches, they went to the most modern digital switching produced by European firms.