Functional separation in telecommunications: a comparative analysis of infrastructural sectors

During the past 20 to 30 years, public utilities have been subject to market reforms in most parts of the world. Liberalisation has been introduced to improve efficiency in terms of lower costs and more and better services. The subject of this paper is the Danish reforms of its public utilities. The focus is on the utilities where the reforms were first introduced, i.e. telecommunications and electricity. The paper examines the following questions: Which are the main reasons for the different regulatory approaches to the liberalisation of telecommunications and electricity supply?
In which direction is the regulation of the two industries developing presently? Furthermore, to what extent have the policies implemented been successful? Finally, is there a relationship between the modes of regulation and the rates of success in the two sectors?

The basic answers in the paper are that the differences in regulation primarily rest on the differences in the techno-economic structures of the two industries, but that some degree of convergence between the modes of regulation has occurred lately. With respect to the rate of success, the achievements are most obvious in telecommunications where consumers benefit from lower prices and more options, while the gains are more debatable in the case of electricity. Regarding the relationship between the modes of regulation and the rates of success, the overall answer is that
there is a stronger relationship between the techno-economic structures of the two sectors, on the one hand, and the modes of regulation and rates of success respectively, on the other hand, than between the different modes of regulation and the rates of success.