Quality Valuation for Customers

Determining consumers’¬†willingness to pay¬†for higher quality service is a difficult task for both utility managers and regulators. Higher standards generally result in higher costs that translated into higher prices for services, thus reducing access of low-income households to those services. Regulators can address that problem by authorizing alternative providers to supply lower quality services at lower prices than the incumbent utility. Another option is to allow the carrier to offer diversified services, if such services lend themselves to differentiated tariffs and the targeted group for the lower-price, lower-quality services can be identified.