The Challenge of Network Industries

“Network” industries such as electricity, air transport, telecommunication, freight rail, and internet services face a challenge with their competing flow and grid components.  Flows are the power, messaging, trains, airplanes and travelers; grids are the lines, tracks, airports and highways are the grids.

The operating and investment decisions of the flow and grid are best coordinated closely.  For example, the decision to expand railways depends on profitability and sufficient additional freight traffic.  The addition of new high-capacity DC electrical grid components or a new power plant might be good or bad, depending upon whether one also introduced pricing policies that would encourage greater energy use and/or consumers.

A common problem affecting most network industries is that only rarely is the same entity in control of both the grid and the flow.  Thus, fights emerge on such varied topics as “net neutrality”, airport charges and slot allocations, pricing of flow services vs. pricing of grid services and so on.  Further exploring these challenges would prove useful for business expansion.