“Everything Over IP” Changes Universal Service
Richard D. Taylor
Palmer Chair Professor of Law and Telecommunications Studies and Law
Co-Director, Institute for Information Policy
College of Communications
Pennsylvania State University
rdt4@psu.edu
814-863-1482
ist.psu.edu/ist/directory/faculty/?EmployeeID=13
Soon voice, video and everything else will be delivered over IP networks. Former FCC Commissioner Abernathy characterized it as a move towards “Everything Over IP” (EOIP). In the world of EOIP, it all becomes just delivering packets of bits -- a commodity service. In the EOIP world, “voice” capability is being integrated into many applications, and will not manifest merely as VoIP. It will be part of messaging (IM), games, "push to talk," and likely will be a basic feature of next generation operating systems. It will be available in many ways at no separate charge. It may be ad supported, or free, or bundled. In the EOIP world, there is not a need for a separate voice network. Charging consumers based on criteria such as time of call, time of day, distance of call, local vs. long-distance, and length of conversation will no longer make sense as communication enters the global internet that is no longer usage sensitive or distinguishes between local and long distance or between voice and data.
What are some of the implications of this move to EOIP for assessing universal service fees? Assuming current clear trends continue:
- There will be no distinction between local and long distance
- There will be no distinction between interstate and intrastate
- There will be no distinction between wireline and mobile
- There will be no “basic package of services” around value added voice services (i.e., the current minimum standard “universal service” package)
- There will be no meaningful class of “voice” service. There will only be a bit stream.
- There will be no stand-alone PSTN. There will be a ubiquitous IP based network of which the traditional PSTN is a component.
- Technology will make the network accessible anywhere by some technical means – the only barrier will be price.
- There will be no meaningful “telephone numbers” in the current sense; there will still be numbers that look like telephone numbers, but will not be attached to a particular telephone or geographic location.
- There will be multiple carriers delivering the same service, packets of bits, configured in similar ways.
- All traditional regulatory jurisdictional boundaries will become permeable.
- Customers can have their bits configured as they please, or can configure them themselves.
- “Voice” in many cases will be essentially free and/or ad supported and/or provided by non-profit or municipal entities.
- “Voice” in many cases will not be a separate service for purposes of billing or measurement of traffic
- Regulation of the network will be federalized, with a corresponding loss of state-level control. This may happen quickly if the FCC declares all IP-enabled services to be interstate.
A value-chain analysis of the EOIP world suggests the following rough hierarchy of candidates for fair contributions to a restructured universal service fund:
- Infrastructure facilities owners (may be different than carriers)
- Facilities-based transport (carriers and others eligible for USF distributions), CLECs and users of unbundled services
- Virtual network operators (which may own no facilities, but simply “brand” facilities operated for them by others)
- Network access providers (ISPs, IAPs)
- Self-identified “carrier” companies, including virtual carriers “holding out to the public”, e.g. Virtual Mobile Network Operators) whether or not facilities-based
- Direct Enabling Technologies (software and hardware)
- All IP-enabled services
- Sellers of products and services over the Internet
- Applications offered through the network
- Content providers for a fee
- Indirect enabling technologies
A successful advanced universal service program should:
- Eliminate unnecessary or counterproductive regulations
- Actively promote competition
- Let the market function to the maximum extent possible
- Create incentives for efficiencies
- Avoid distorting effective price competition
- Inform potential users of availability and benefits
- Prefer subsidies and incentives to price controls
- Focus on network capabilities (functionalities) rather than specific technologies
- Attach costs properly to services
- See that those who create costs are the ones to bear them
- Costs process must be transparent/fair (all see costs and allocations)
- Avoid paying more than the true market price for subsidized services
- Encourage technological innovation
- Not subsidize inefficient, outmoded or non-competitive technologies
- Target narrowly high cost and low-income subsidies
- Do not subsidize technologies/services for which there is no demand
- Make the subsidy as small as necessary to accomplish the goal
- Competitive neutrality
- Structural neutrality (not favor integrated or unbundled services)
- Technological neutrality
- Applications and content neutrality
- Geographic neutrality (not disproportionately burden any part of the country)
- Transitional neutrality (no negative shocks or windfalls due to transition)
- Jurisdictional neutrality (should integrate into the federal-state regulatory system)
- Neutrality as between purchase of services over end-user equipment
- No one involuntarily loses current telephone service. Those who wish to do so may keep it indefinitely. No one is forced to get a computer.
- Build on existing programs
- Recognize geographical differences (population density and income)
- Maintain appropriate jurisdictional roles
- Create a role for non-profits, community groups, co-ops, demand aggregators, public-private partnerships.
- Be flexible during transition