Utility services such as water, gas and electric service, etc., are considered essential public services and require expensive infrastructure, such as transmission and distribution lines and pipes. It is often impractical for more than one provider in an area to provide utility services due to the cost of producing and constructing competing infrastructure. In other words, the barriers to entry for a competitor are high.
Deregulation of utility services is a possible alternative to a monopoly system. For example, the telecommunications industry was largely deregulated by the federal government through the Telecommunications Act of 1996. Advances in technology, such as fiber optics and cell phones, allowed competitors to function in this industry and a competitive market to be created. As a result, the PUCN’s regulation of telecommunication companies in Nevada is minimal. As of May 2013, the PUCN exercises traditional regulatory authority over rate and service quality for only 10 telecommunications companies called Small Scale Providers of Last Resort, which operate largely in the rural areas of Nevada.