Stranded-cost test

The treatment of inherited burdens in formerly regulated industries is discussed under the heading of "stranded costs".

The problem is that prior to liberalization former monopolists were subject to the universal service obligation and therefore made specific investment decisions with respect to this obligation, as well as based on political and social objectives and requirements. In the view of purely private sector companies, these investments would never have been made. The costs which  arise from former decisions in connection with the earlier universal service obligation therefore act as a burden for the former monopolists unlike its competitors.

In connection with the privatization of the energy, postal, and telecommunications sector, economics provides tools on how to treat these burdens as stranded costs to make competition fair.