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Examples of Regulation and Deregulation in America

April 8, 2015
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Since the late 1980’s, changes have been taking place in both the natural gas and electricity industries to encourage healthy competition in the marketplace for both businesses and residential customers. As time passes, more states are opening up energy deregulation, and over time we expect all states to also make the change.

The states that have opened their markets up to energy suppliers have seen their rates drop, and their citizens have reaped the benefits of more affordable energy. Here are other examples of deregulation in the United States that prove how it can benefit the consumer.

Airlines

In 1978, airlines were strictly regulated by the government. Fares, routes, the new markets existing airlines could enter, and other factors were controlled by government regulators. In 1978, the Airline Deregulation Act changed the way airlines were controlled. After deregulation in 1978, many aspects of the industry, including the price to fly, were controlled by the market. Consumers often paid less, the government stopped subsidizing routes and companies, and airlines have looked more like the rest of businesses in the United States since that time. The strong companies thrived, the stable companies survived, and weak companies merged or closed.

Telecommunications

Deregulation encourages competition, which then benefits consumers by providing more choice and a better product overall. The telecommunications industry is a good example of variety of choice in an industry benefitting the consumer. Before 1984, AT&T was the world’s largest company and held a natural monopoly over the nation’s local and long distance calling. Microwave Communications Inc. (MCI) entered the market with new technology that could bypass traditional lines to transmit long distance calls. This was just before an anti-trust suit was brought against AT&T in 1984. Following the suit, AT&T was broken up. Companies began to flood the long distance market, which in turn drove innovation and price competition. Increased competition among providers added pressure to enter new markets and push the limits on new product opportunities. This led to the introduction of features such as voicemail, call-waiting and forwarding, and touchtone features. Increased competition indirectly pushed providers to develop cellular technology and the internet. The advancements in the communication industry since 1984 have been vast and far reaching. The internet is a vital resource across all industries, and 90% of Americans own a cell phone, according to the Pew Institute.

Contact IGS and see how energy deregulation can help you. We provide reliable natural gas and electricity service to help meet your needs.