What if Americans could choose the Universal Service most likely to serve their individual needs?
Jorge Schement
Distinguished Professor
Co-Director of the Institute for Information Policy
Department of Telecommunications
College of Communications
College of Information Sciences and Technology
Pennsylvania State University
jrs18@psu.edu
814-234-0777
http://www.psu.edu/dept/comm/faculty/schement.html
This paper proposes a policy framework for promoting American global competitiveness by establishing new standards of information and communication access for individuals. Section 254 of the Telecommunications Act of 1996, which construes an evolving standard of Universal Service, serves as the basis for a new model of Universal Service responsive to innovations in telecommunications
In order to formulate Universal Service anew, we begin with five basic assumptions:
1. Universality. Universal Service should offer interconnectedness across a range of media as an opportunity to all Americans. The goal should be to allow any American to reach any other American within a reasonable time table. The boundaries of the technology should be transparent.
2. Interactivity. Universal Service should pursue the integration of telephony, broadband, and Internet technologies, in order to allow users to communicate across platforms in a transparent environment.
3. Content. Information necessary to achieve universality and interactivity, and so enable basic democratic, economic, and social participation, should be available to all at a reasonable price.
4. Personal Choice. Americans should enjoy the freedom to choose the configuration of access technologies and information services that constitutes the optimal universal service for their individual circumstances.
5. Affordability. Use of the information infrastructure must fall within the means of all Americans. The rate structure should aim at maximizing the number of participants. Regulations should aim to facilitate staying on the network.
An Informed Choice Model of Universal Service
This model of universal service begins with the premise that individuals should choose for themselves the configuration of universal service options that best suits their particular needs. The components of that bundle -- integrating traditional telephony, access to broadband, and Internet services -- will allow individuals to organize their personal and household information environments, in order to achieve their goals as they themselves see fit. Elements of the model include:
1. Open Competition and Choice
In principle, any entity wishing to offer a basic bundle should be free to enter the market. Consumers should enjoy the widest possible range of choices, in order to maximize the value of access configurations to themselves. Clearly, if the goal is to meet the needs of individuals, as they themselves perceive these needs, then individuals must be able to choose among differentiated offerings.
2. Bundled Services
Universal Service, in order to enable basic access in a converged technological environment, should allow individuals to connect to the national network transparently across media. The bundling of telephone, broadband, and Internet services will enhance choice and enable consumers to tailor the configuration of telecommunications services to their own personal circumstances. Therefore, providers should be encouraged to offer as many bundles as they wish, in order to pursue strategies of market segmentation.
3. Setting the Price of Bundles
The pricing possibilities fall somewhere between two familiar poles. At one end, bundle providers set the price of their bundles. If they do, even under the oversight of the FCC, competition receives a strong boost. However, an open pricing regime may not provide service affordable to all Americans; some phone companies have been slow to target low income households even though those same households are high users of advanced services. In addition, new entrants providing local telephone service have largely ignored the potential in low income markets. At the other end, the FCC sets the price of the basic bundle and allows providers to compete on the content of the bundle. Such a policy offers assurances to lower income consumers that they have been remembered in the transition, but will likely be opposed by venders who will argue against being shackled to a fixed price (or prices) in such a competitive arena.
4. Protection of existing Universal Service Guarantees
As a pledge against unintentionally widening access gaps, all bundles should be required to provide existing basic telephone service at a minimum (i.e., dial tone, directory assistance, emergency assistance, local and long-distance service).
5. Leading from the Bottom Up
Agencies with an understanding of local conditions, such as state Public Utility Commissions, should be encouraged to take the lead in assessing local needs to identify specific access gaps and needs.