The following are the advantages of the existence of public utilities.
1. Absence of competition:
As the competition does not exist due to the monopoly of operation, the public is sure to get uninterrupted and efficient services.
2. Absence of discrimination:
The public utilities provide uniform services at uniform rates to the users. There is no discrimination between the rich and the poor. The rich do not pay more and the poor do not get any concessions in rates charged by the public utilities.
3. Unified control:
The control of utilities is directly in the hands of the Government. As a result, the control will be effective and certain, as the Government always favours the public interest at large.
4. Service motive:
The primary objective of public utilities is to offer services to public and not make profits. This ensures provision of maximum benefit to the society at the minimum cost.
5. Constant revenue:
As the utilities offer services to the public in an uninterrupted manner, they trade only on cash basis. This ensures regular and constant revenue to the utilities.
6. Absence of middlemen:
The utilities offer services directly to the users. There is no chance of any middlemen being used in providing services, thereby the cost of services offered do not get appreciated.
The public utilities, however, suffer from the following drawbacks:
1. Large capital requirements:
Due to the density and spread of the population, the scope of coverage of the population in rendering services is also wide. This necessitates huge capital requirement due to heavy installation expenses and the cost of procuring land.
2. Lack of efficiency:
Due to monopoly in operation and absence of competition, the quality of the services may not be very efficient. The existence of competition alone can ensure increase in the efficiency of the services offered by the utilities.
3. Absence of credit facility:
Credit facility is a part of normal business transactions. The business and commercial establishments may find it difficult without credit facility, because their use of the services could be at a high rate while their liquidity position might not be very good throughout the year.
4. Delay in implementation:
Due to the bureaucratic set up at the Government office, there may be enormous delay in implementing the decisions, which may affect the nature of services offered by the utilities.
5. Absence of choice to users:
The existence of monopoly gives the users no other choice, but to accept the nature, quality and quantity of the services offered by the utilities. They cannot do away with the utilities because the services are essentially required for the civilised and comfortable living of the users.
6. Presence of political interferences:
Political interferences may affect the operation and efficiency of the services offered by the utilities. This gives room for chances of misuse of power by political leaders heading the concerned ministry.
Applicability to different kinds of business
The Public Utility form of organisation is suitable in cases of the following essential areas:
1. Domestic/Commercial LPG supplies
2. Road Transport
3. Railways and Tramways
4. Electricity supplies
5. Postal facilities and Telegraph facilities
8. Water supply
9. Sewerage regulation facilities 10. Medical facilities.