Nontraditional infrastructure serviceproviders supply many low-income consumers in slums andurban peripheries in developing countries. And technologicalchange has eased entry by new providers. But the currentapproach to private participation in infrastructuretypically gives exclusivity to a local monopoly for a longperiod. In return, the monopoly utility is obligated toprovide service to all in the area at a certain standard,charging a rising block tariff and using somecross-subsidies. This approach can inadvertently erectbarriers to improving service for low-income households.Policymakers therefore need to rethink their approach toprivate participation transactions and their regulation. Inparticular, they need to focus on facilitating new entry.