1
00:00:08,660 --> 00:00:10,510
Welcome back to the course.

2
00:00:10,510 --> 00:00:12,260
My name is Hans de Bruijn.

3
00:00:12,260 --> 00:00:17,450
I'm professor of Public Administration and
Management at the TU Delft.

4
00:00:17,450 --> 00:00:22,410
My research is on complex decision-making
processes in the public sector and at the

5
00:00:22,410 --> 00:00:28,580
intersection of the public and private sector,
including various utility sectors.

6
00:00:28,580 --> 00:00:33,820
This lecture is an introduction to the governance
of privatized or liberalized utility sectors,

7
00:00:33,820 --> 00:00:38,839
like transport, electricity,
natural gas or telecom.

8
00:00:38,839 --> 00:00:42,309
The basic philosophy of liberalization has
always been very simple.

9
00:00:42,309 --> 00:00:44,840
There is a network and there is a service.

10
00:00:44,840 --> 00:00:47,690
For example,
Rail and transport.

11
00:00:47,690 --> 00:00:51,730
Or a electricity network and the delivery
of electricity.

12
00:00:51,730 --> 00:00:57,600
The costs of the roll out and maintenance
of a network are sometimes so extremely high,

13
00:00:57,600 --> 00:01:02,900
that no private party is willing to invest in it
and the network is therefor in public hands.

14
00:01:03,270 --> 00:01:07,890
Is some countries there is an additional argument
for that: networks are strategic assets and

15
00:01:07,890 --> 00:01:11,759
should therefor not be owned by private parties.

16
00:01:11,759 --> 00:01:18,759
But in other countries have no problem with
networks being owned by private parties.

17
00:01:19,080 --> 00:01:24,250
The owner of the network should not be the
one who delivers the service - so the unbundling

18
00:01:24,250 --> 00:01:29,630
of network and service delivery is key in
the liberalization philosophy.

19
00:01:29,630 --> 00:01:33,240
Former incumbents,
that owned the network and delivered the service,

20
00:01:33,240 --> 00:01:35,130
have been split up.

21
00:01:35,130 --> 00:01:40,000
One part of the incumbent's organization has
developed into a network owner;

22
00:01:40,000 --> 00:01:44,039
the other part delivers a service.

23
00:01:44,039 --> 00:01:51,500
But service delivery should not be a monopoly,
so the former incumbent that is now only delivering

24
00:01:51,500 --> 00:01:56,030
a service,
is faced with competitors.

25
00:01:56,030 --> 00:02:00,720
This is a blueprint for a greenfield situation.

26
00:02:00,720 --> 00:02:05,500
And we all know,
blueprints do not work and greenfield situations

27
00:02:05,500 --> 00:02:09,860
do not exist!
There are many differences between sectors,

28
00:02:09,860 --> 00:02:16,200
many different brownfield situations,
incumbents sometimes tried to hamper new parties,

29
00:02:16,200 --> 00:02:21,530
business models proved to be less attractive
that originally thought - but the basics of

30
00:02:21,530 --> 00:02:28,000
this philosophy are visible
in almost all utility sectors.

31
00:02:28,000 --> 00:02:33,380
One of the main consequences of this philosophy
is the extreme organizational fragmentation

32
00:02:33,380 --> 00:02:40,170
of the utility sectors as we also explained
to you in the animation during week 1.

33
00:02:40,170 --> 00:02:43,350
In the old days,
there was sometimes only one organization,

34
00:02:43,350 --> 00:02:47,580
a public monopolist,
that owned the network and delivered the service.

35
00:02:47,580 --> 00:02:52,550
Now there are many companies delivering services
and there are sometimes even competing networks

36
00:02:52,550 --> 00:02:56,510
- particularly in the world of Internet and telecom.

37
00:02:56,510 --> 00:03:00,870
So there is this fragmentation,
but there is another thing - the convergence

38
00:03:00,870 --> 00:03:02,430
of utility sectors.

39
00:03:02,430 --> 00:03:07,069
In the old days there were clear distinctions
between for example electricity and transport

40
00:03:07,069 --> 00:03:10,990
- but now these two sectors are converging.

41
00:03:10,990 --> 00:03:14,819
Solar and wind energy are unpredictable sources
of energy,

42
00:03:14,819 --> 00:03:16,490
so there might be under- or over-production.

43
00:03:16,490 --> 00:03:22,210
That's a problem and the storages of electricity
might be the solution.

44
00:03:22,210 --> 00:03:26,520
How can be store electricity? Well,
perhaps the batteries of electric vehicles

45
00:03:26,520 --> 00:03:33,520
are the solution - and the sector of electricity
and transport are suddenly closely connected.

46
00:03:33,990 --> 00:03:39,370
So fragmented sector are converging,
and the result is a spaghetti-like situation.

47
00:03:39,370 --> 00:03:43,020
Many actors,
many interdependencies - what the social scientists

48
00:03:43,020 --> 00:03:48,220
call 'a multi-actor network'.

49
00:03:48,220 --> 00:03:53,910
As part of the assignment for week 2 we showed
you how to make an actor analysis.

50
00:03:53,910 --> 00:03:57,209
Sometimes these actors have to work together.

51
00:03:57,209 --> 00:04:00,870
Take the transport sector,
with its many players: several modalities,

52
00:04:00,870 --> 00:04:06,790
many regions and per modality,
per region a number of players,

53
00:04:06,790 --> 00:04:10,650
both public and private,
with completely different interest and no

54
00:04:10,650 --> 00:04:12,270
central authority.

55
00:04:12,270 --> 00:04:17,700
No single actor is in control, there is a network
of interdependencies between these actors.

56
00:04:18,039 --> 00:04:21,229
As said,
sometimes they have to work together

57
00:04:21,229 --> 00:04:25,040
from a client's perspective,
it is very attractive to have one pass that

58
00:04:25,040 --> 00:04:31,000
can be used in the whole country, but it requires
cooperation between all these players.

59
00:04:31,000 --> 00:04:38,600
Cooperation in a multi-actor network is extremely
difficult - because of the many different interests.

60
00:04:38,600 --> 00:04:43,400
How to get actors aligned,
when they have conflicting interests.

61
00:04:43,400 --> 00:04:47,310
In the remaining part of this lecture,
I will explain the essence of getting actors

62
00:04:47,310 --> 00:04:50,030
aligned in a multi-actor world.

63
00:04:50,030 --> 00:04:53,270
And I will use a simple example: a family.

64
00:04:53,270 --> 00:04:57,790
A family of five - father, mother,
a 19 year old daughter,

65
00:04:57,790 --> 00:05:03,900
a 16 year old daughter
and a boy of 8 years old.

66
00:05:03,900 --> 00:05:05,220
Fragmentation.

67
00:05:05,220 --> 00:05:07,530
And there are probably different interests
in the family.

68
00:05:07,530 --> 00:05:09,310
There is no central authority.

69
00:05:09,310 --> 00:05:18,100
Mum and dad are equals, and the eldest daughter
is 19 years old, so she has blocking power.

70
00:05:18,150 --> 00:05:20,310
The father has a brilliant idea.

71
00:05:20,310 --> 00:05:24,500
He has planned a summer holiday to Italy,
in august next year.

72
00:05:24,500 --> 00:05:27,270
And he is trying to get his family aligned.

73
00:05:27,270 --> 00:05:29,780
Unfortunately,
no one agrees with this idea.

74
00:05:29,780 --> 00:05:32,210
There is no support for this plan.

75
00:05:32,210 --> 00:05:38,320
And you will understand,
pushing this idea through is pointless endeavor.

76
00:05:38,320 --> 00:05:47,000
What to do? The idea is: change this game
form a one issue game to a multi-issue game.

77
00:05:47,080 --> 00:05:52,200
Put more issues on the agenda
than just the summer holiday.

78
00:05:52,260 --> 00:05:56,900
Just a few examples:
party rules, buying a dog,

79
00:05:56,970 --> 00:06:00,120
investing in more iPads,
spending weekends together,

80
00:06:00,120 --> 00:06:03,340
the skiing holiday,
pocket money, etc. etc.

81
00:06:03,340 --> 00:06:10,240
The mechanism is: the agenda has so many issues,
that there is potential gain and potential

82
00:06:10,240 --> 00:06:12,820
pain for each of the players.

83
00:06:12,820 --> 00:06:17,540
What's the impact of a multi-issue game? 
4 things.

84
00:06:17,540 --> 00:06:22,669
1. A multi-issue game is an incentive to sit
down with each other.

85
00:06:22,669 --> 00:06:25,930
An incentive to enter the process of cooperation.

86
00:06:25,930 --> 00:06:28,870
Each player knows 
- there is something in it for me,

87
00:06:28,870 --> 00:06:32,370
and without cooperation,
there is no perspective of gain.

88
00:06:32,370 --> 00:06:34,490
And believe me,
once you have entered the process,

89
00:06:34,490 --> 00:06:39,020
it is very hard to leave the process.

90
00:06:39,020 --> 00:06:45,300
2. A multi-issue game 
is an incentive for unfreezing.

91
00:06:45,300 --> 00:06:49,380
In a one issue game,
there is always the risk of an either-or situation.

92
00:06:49,380 --> 00:06:53,949
Either in favor of a summer holiday in Italy
or against a summer holiday in Italy.

93
00:06:53,949 --> 00:06:56,800
And that might easily result in a stalemate.

94
00:06:56,800 --> 00:07:00,940
In a multi-issue game,
parties will almost automatically become more

95
00:07:00,940 --> 00:07:04,190
flexible,
because the multi-issue game forces them to

96
00:07:04,190 --> 00:07:07,600
play the game of giving and taking.

97
00:07:07,600 --> 00:07:12,270
3. A multi-issue game has strong incentives
for cooperation.

98
00:07:12,270 --> 00:07:18,460
How does that work? Suppose this family has
had several meetings and has reached deals

99
00:07:18,460 --> 00:07:20,310
on each of this issue.

100
00:07:20,310 --> 00:07:22,000
So there is a deal on party rules.

101
00:07:22,000 --> 00:07:25,650
Two family members like the deal,
three others don't.

102
00:07:25,650 --> 00:07:29,320
there is a deal on the dog 
- three agree, two don't.

103
00:07:29,320 --> 00:07:33,860
A deal on the skiing holiday 
- four proponents, 1 opponent.

104
00:07:33,860 --> 00:07:37,800
Per issue,
we'll find another coalition of proponents

105
00:07:37,800 --> 00:07:39,650
and opponents.

106
00:07:39,650 --> 00:07:42,520
So there are changing coalitions.

107
00:07:42,520 --> 00:07:48,110
And changing coalitions create incentives
for cooperative behavior.

108
00:07:48,110 --> 00:07:52,210
Why? You are my opponent on issue 1.

109
00:07:52,210 --> 00:07:56,310
Normally, I would try to block you.

110
00:07:56,310 --> 00:08:02,940
But I know I need your support on issue 2,
on which we agree and work together.

111
00:08:02,940 --> 00:08:08,330
Because of that - I will behave moderately
when talking about issue 1.

112
00:08:09,000 --> 00:08:15,960
4. Can you imagine that the conclusion of this
family is that there will be no summer holiday

113
00:08:15,960 --> 00:08:19,240
at all,
and that the father of the family is perfectly

114
00:08:19,240 --> 00:08:22,330
happy with that? Yes.

115
00:08:22,330 --> 00:08:26,400
Why? Because the father will learn during
the process.

116
00:08:26,400 --> 00:08:30,169
There are so many issue on the agenda,
that there are many other ways to serve his

117
00:08:30,169 --> 00:08:33,259
interest - having his family together.

118
00:08:33,259 --> 00:08:38,209
Multi-issue processes are an incentive for
learning.

119
00:08:38,209 --> 00:08:39,449
Back to the world of infrastructure.

120
00:08:39,449 --> 00:08:42,539
There is more fragmentation than before.

121
00:08:42,539 --> 00:08:44,139
That makes it,
one the hand,

122
00:08:44,139 --> 00:08:45,259
harder to cooperate.

123
00:08:45,259 --> 00:08:50,319
One the other hand,
more organizations often means more issues,

124
00:08:50,319 --> 00:08:54,110
and more issue make it easier
to find common ground.

125
00:08:54,110 --> 00:08:58,490
So when all the organizations in the transport
sector have to reach consensus on one travel card,

126
00:08:58,490 --> 00:09:02,179
never say: this is the envisaged cart,

127
00:09:02,179 --> 00:09:05,660
please accept it,
but try to collect a series of issues.

128
00:09:05,660 --> 00:09:10,079
The more issues you have,
the easier it is to get the parties aligned!