In lieu of state funding for infrastructure or ongoing maintenance, an allowance for a monopoly provider may be sufficient incentive for large private investment. There are two primary approaches of monopoly regulation with which states have initiated modernization of their infrastructure. Once the basic infrastructure is in place to provide service deemed necessary to the general populous, state financing and monopoly allowance may not provide the proper incentives for innovation and technological advancement, as does open competition. Incentives for private investment in telecommunications infrastructures in a competitive environment can be regulatory or non-regulatory. Regulatory incentives include a tiered approach to regulatory reform, which bases the level of regulation or treatment in a market on the amount of competition or the size of participating companies.
Deregulation is another way that states are encouraging competition through regulatory changes.
Non-regulatory incentives include the creation and use of a 'universal fund', and a system of social compacts. In addition to using these approaches to direct competitive efforts toward telecommunications advancement , states also may encourage compatibility between networks in these same ways. Options Summary Descriptions of programs designed to meet a variety of goals in different states have been reviewed in this paper. This section summarizes options that have been used by other states and achieved reasonable success. As the technological environment continues to change, state government must adapt and impose proper stimuli to achieve and maintain its goals in the public interest.