Answer by Yuan Gao:
Because it is not. AC is, in fact, not inherantly better for long-distance power transmission than DC. And this is why HVDC (high voltage DC) is actually used over much of Europe for inter-country and under-water power links:
From wikipedia's page on(red is existing HVDC links)
What's good for long-distance power transmission is high voltages. The higher the voltage, the lower the resistive losses in the cable. That's why mains power is transmitted at many hundreds of thousands of volts, and is only stepped down to the 110V or 230V that you're used to when it is near your building.
AC is much easier (therefore cheaper) to step up and down in voltage than DC, and can be done more efficiently (typcially, currently) than the much more expensive and complex DC step-up/step-down systems. That is why AC is used for mains power transmission at a national level.
BUT, AC has one downside compared with DC: inductive and capacitive losses. The larger the inductance and capacitance of a piece of wire is, the more difficult it is to keep trying to change the direction of flow of electrons, which is what AC is doing at 50 or 60 times a second. DC on the other hand, has the current flowing in one direction all the time, and so is not impeded by this inductance, and has negligible capacitive losses.
Straight wires in air have very little inductance and capacitive losses. Over the distances that mains power is transmitted, there are some losses when using AC, but the losses are small. A DC system would have better transmission efficiencies as it has lower losses, but would be more expensive and less efficient at the step-up/step-down stages.
Underwater cables however, are a different story. Underwater cables have a much higher inductance and capacitance (due to the interaction of the magnetic and electrical field with the water). An underwater AC cable would have much higher capacitive and inductive losses, and so high voltage DC cables are always used for long distance underwater power transmission.
So to summarise, DC is inherently better for long-distance power transmission, but step-up/step-down systems are expensive and less efficient than AC. But AC has cheaper and more efficient step-up/step-down systems. Overall, which system is preferred depends on a combination of overall cost unit of energy delivered – it's often cheaper to just generate some more energy to counteract for higher transmission losses. Because of this, National grids uses AC, while inter-country underwater and long-distance cables use DC.
There is room for improvement in DC step-up/step-down technology, every breakthrough in power semiconductor technology means that DC power transmission becomes slightly better. At some point, it is feasible that DC power overtakes AC. That might be some way off yet, but it's almost an inevitability.
Side note: There are other reasons that AC is preferred to DC, that doesn't have anything to do with which one is better for power transmission. AC motors can be built to take advantage of the AC power transmission, which is particularly useful for industry, where you can simply plug a cheap motor into the 3-phase supply. But even here, DC motors are gradually gaining popularity due to advances in technology.