BEECHER - NAWC

Water ComparedStructural ChangeEconomic FactorsThe economic rationale for restructuring centers on the desire to provide incentives forefficiency through competition v. regulation. Transforming traditional utility monopolies is anecessary, but not a sufficient step, toward competitive markets100%90%80%Market Share of Toll Service Revenues(1984 to 1996)----=~------.. .....70%--------+-AT&T60%50% -+-MCI40%30%20%10%0%~~--+-All othercarriers-+-SprintThe telecommunications industryset the precedent for the evolutionfrom monopoly to competition.Since the divestiture of AT&T in1984, that quintessentialmonopoly gradually has lostmarket share to upstarts MCI,Sprint, and now others. 20A factor that all of the utilityindustries have in common is theentrance of new market:; ~ :8 :;; :8 ~ g ;;; ~ ~ ~ ~ ll: _.,._ Worldcom participants. As barriers to entry~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~fall and services are unbundled,the number and scope of participants appear to expand. This trend is most apparent for thetelephone industry. In the telecommunications field, substantial diversity and growth hastaken place in the long-distance and wireless service areas. Deregulation and the dismantlingof entry barriers have paved the way for new services and new providers. The growth incellular service providers has been particularly striking.Interstate Telephone Service Providers(1997)Cellular, personalcommunicationsservice andspecialized mobileradio (853)22%Pay telephoneprovider (533)14%Paging and othermobile servicecarriers (364)9%Local exchangecarrier (LEC) (1,376)----37%Prepaid calling cardprovider (16)0%Operator serviceprovider (27)1%Toll reseller (345)9%lnterexchangecarrier (149)4%Competitive accessproviders andcompetitive LECsOther toll (50) (119)1% 3%20In 1998 MCI merged with Worldcom.NAWC 62September 1998