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compatible technology country-wide for telephone consumers. Regulators emphasized limits on profits, enforcing "reasonable" prices for service, setting levels of depreciation and investment for new technology and equipment, dependability and "universality" of service. "Universal" was originally used by AT&T to mean, "interconnection to other networks, not service to all customers". After years of regulation, the term came to include infrastructural development of telephony and service to everyone at a reasonable price.
382:
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70:
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service by merging competing telecommunication service providers. The main principle behind the act was that there should be only one system in each community through which all users communicate. The focus was exclusively on local service rather than long-distance service, as no independent long-distance lines were able to compete with AT&T.
283:, whose preamble declared its purpose as “to make available, so far as possible, to all the people of the United States, a rapid, efficient, Nationwide, and world-wide wire and radio communication service with adequate facilities at reasonable charges”. The chief purpose of this law was to combine the
419:
As seen from the above, the number of potential customers increases as the number of people who can now afford it increases. However service providers need to be able to actually provide that service through their network. This build-out of network is also subsidized by funds like the High Cost Fund
247:
had favored status from U.S. government, allowing it to operate in a noncompetitive economic environment in exchange for subjection to price and quality service regulation. The government asserted that a monopolistic telephone industry would best serve the goal of creating a "universal" network with
192:
up until the early 20th century, telephone service was fragmented. The ability to make a telephone call depended on not just on both parties having telephones, but that their telephone companies used the same standards and that there was a physical interconnect of their networks. The term "universal
400:
where the region in red shows the extent of the original service and the increase shown by the green area represents the increase in the service area once the subsidy helps reduce the prices. The conclusion is simple, as the prices reduce from P1 to P2 the quantity of customers increases form Q1 to
291:
with greater powers over both radio and wire communications. The language of the 1934 Communications Act was later re-interpreted to mean a commitment for telephone companies to provide service to all people, but historically this language was aimed at the more limited goal of unifying the United
264:
The central practical problem, according to the committee, with the Willis Graham Act was competing telecommunication services serving one individual market. The act was in favor of a monopoly, which aimed to exempt competing telephone companies from the antitrust laws and allow them to unify the
216:
These independent phone companies did not interconnect to the Bell System; though modern commentators suggest Bell refused to do so as an excuse for monopolization, it was argued then that phone systems of that day could not interconnect unless all phone companies used the same technology, as the
389:
Though the nomenclature is different the importance of the goal of universal service has been noted by most of the countries and similar methods are being implemented to work towards this end. Each country gives certain service providers
Universal Service Provider or Eligible Telecommunications
295:
To comply with the act, AT&T began increasing the price of long-distance service to pay for universal service. The act also established the FCC to oversee all non-governmental broadcasting, interstate communications, as well as international communication which originate or terminate in the
260:
of 1921 was called into action in order to resolve pressing issues in the debate about the merits of interconnectivity of telecommunication. The act marks the first piece of legislation in the history of telecommunication to tackle the increasingly difficult challenges of the telecommunication
304:
Historians of AT&T tend to hold that the modern concept of "Universal
Service" has been essentially the same since the firm's foundation. While agreeing that Vail's coining of the term was clearly influential, other scholars have pointed to a significant shift in meaning connected to the
343:
Most countries fund their USO by requiring the incumbent operator to be the designated USO provider or USP. USPs often previously held a legal monopoly protection. The USO is thus funded by rates/tariffs, and also by scale and scope economies. The risk of such an approach, while allowing
410:
This is a simplistic case and most countries have very complex legislation to guarantee the service and have several subsidy mechanisms to implement universal service. The case shows the idea behind universal service not the universal service mechanism actually used in any country.
220:
Vail argued that an interconnected phone system (the Bell System), operated by one company (AT&T) and with rates regulated by the government, would be superior to the dual system and would produce great social benefits, much like Hill's postal reforms.
142:
in 1837. Though Hill never used the term "universal service", his postal system had the hallmarks of early universal service; postal rates were reduced to uniform rates throughout the nation which were affordable to most
Britons, enabled by the
29:
is an economic, legal and business term used mostly in regulated industries, referring to the practice of providing a baseline level of services to every resident of a country. An example of this concept is found in the US
782:
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industry in the 20th century. Before the Graham act was passed the commonly expressed opinion was, such as by the Senate
Commerce Committee, that telephone service fit the definition of a natural monopoly.
44:
to advance the availability of such services to all consumers, including those in low income, rural, insular, and high cost areas at rates that are reasonably comparable to those charged in urban areas
344:
competitive entry, is that a cross-subsidy exists and thus new entrants can potentially cream-skim (enter in only profitable routes or lines). One response is that some countries have a
52:(97/67/EC), the Electricity Market Directive (2003/54/EC) and the Telecommunications Directive (2002/22/EC). The language of "universal service" has also been used in proposals by the US
209:"One Policy, One System, Universal Service". It was intended as a contrast to the "dual service" that had become common since the original Bell telephone patents expired in 1894, where
320:
was influential in offering a reinterpretation of the 1934 communications Act as defending the benefits of monopoly: not duplicating infrastructure and providing service to all. The
163:. The service obligations of USPS under current law are commonly referred to as the "universal service obligation" or "USO". Universal service is also a key objective of the
49:
660:
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Bell System did. This required many businesses to maintain phones with both companies, or else risk losing customers who subscribed to the other phone company.
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Carrier status. This allows the provider in question to get subsidies from the universal service fund to economically provide the necessary service.
180:
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and have all their telecommunications industries pay a part of their net earnings into it. This fund has different names in different countries:
407:
Since each call in fact costs price P1 and price P2 in the cash flow from the customer, the rest (P1-P2) comes from the
Universal Service Fund.
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of 1913, where AT&T agreed to several measures, including interconnection with non-competing independent phone companies, to avoid
393:
The basic concept of
Universal service is the below-cost pricing of service to increase the quantity of service as shown in Fig. 1.
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is actively exploring universal service reform, and the place of universal service to the broadband communications environment.
487:
84:. Need at least one high-quality source to connect 19th century postal rate regulation and modern concept of universal service.
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720:
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where the meaning of "Universal
Service" became less focused less on interconnection, and more on providing service to all.
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Universal service was widely adopted in legislation in Europe beginning in the 1980s and 1990s. For instance, under the EU
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198:
113:
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Universal service in telecommunications was eventually established as U.S. national policy by the preamble of the
869:
Courtesy, Professor James
Alleman, University of Colorado at Boulder, Network Economics and Finance I, Lecture 24
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20:
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328:
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of 1984 dissolved the monopoly that inspired "Universal
Serivce" and the FCC began to abandon rate regulation.
237:
131:
80:
31:
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The size of the subsidy paid out to the telecommunication service provider in this case is shown in Fig.2.
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Universal service, in the sense of aspiring to provide service to all was more explicitly codified by the
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monopoly on mail. Hill's reforms were quickly adopted by postal authorities worldwide, including the
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Eventually, Vail prevailed in his views, first through state laws and ultimately through the
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8:
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431:" program that subsidizes telephone service to low-income people regardless of location.
244:
148:
38:
to promote the availability of quality services at just, reasonable, and affordable rates
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with the ICC's wire communications powers, including regulation of AT&T, into a new
213:
operated not only in non-Bell System markets, but also as a competitor in Bell markets.
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to increase access to advanced telecommunications services throughout the Nation
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1912 Bell System advertisement promoting its slogan for universal service
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State's fragmentary telephone exchanges into a single universal system.
16:
Provision of baseline level of services to every resident of a country
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98:. Statements consisting only of original research should be removed.
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action, thus formalizing the Bell System monopoly. Meanwhile, the
661:"Universal service and the telecommunications act: myth made law"
317:
440:
206:
364:
738:"Theodore N. Vail and the Civic Origins of Universal Service"
299:
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Pakistan has the Universal Service Fund Company (USF Co.),
352:
Chile has the Telecommunications Development Fund (FDT),
171:
Interconnection between telephone exchanges (1907-1960s)
715:. Cambridge, Mass.: Cambridge, Mass. : MIT Press.
420:
in the United States which is also provided for in the
355:
India has the Universal Service Obligation Fund (USOF),
893:
427:
Besides services to deprived areas, there is also a "
130:
of universal service appears to have originated with
592:
236:of 1910 made AT&T subject to regulation by the
624:
900:
822:
401:Q2. Thus satisfying allowing universal service.
59:
451:National broadband plans from around the world
601:Communications Policy and the Public Interest
536:
268:
361:Taiwan has the Universal Service Fund (USF),
251:
159:) which already held a monopoly through the
598:
826:AGENDA-SETTING THE UNIVERSAL SERVICE CASE
544:"AT&T Milestones in AT&T History"
114:Learn how and when to remove this message
783:"Universal service in telephone history"
748:(2). Cambridge University Press: 71–81.
568:"Cybertelecom :: Universal Service"
380:
372:
300:Providing service to all (1970s-present)
201:(the original AT&T) and head of the
179:
780:
658:
901:
520:"Unnatural Monopoly: Critical Moments"
514:
512:
588:Cybertelecom :: AT&T History
735:
707:
599:Aufderheide, Patricia (1999-01-15).
153:United States Post Office Department
63:
509:
13:
713:The Social Impact of the Telephone
629:Tooltip Public Law (United States)
199:American Telephone & Telegraph
14:
925:
887:
560:
368:
333:Federal Communications Commission
289:Federal Communications Commission
829:(PhD). Virginia Tech. p. 95
68:
872:
863:
852:
840:
823:Joanne D. Eustis (2000-04-07).
816:
774:
729:
701:
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312:The 1975 report to congress by
211:independent telephone companies
56:for the reform of health care.
21:Universal Service (news agency)
849:Cornell University Law Library
637:
617:
581:
480:
476:Green Paper on Postal Services
468:
422:Telecommunications Act of 1996
329:Telecommunications Act of 1996
238:Interstate Commerce Commission
175:
147:(first introduced here) and a
32:Telecommunications Act of 1996
1:
742:Business and Economic History
461:
414:
205:, in 1907 with the corporate
909:Telecommunications economics
894:Foundation for Rural Service
802:10.1016/0308-5961(93)90050-d
603:. New York: Guilford Press.
474:See the UK proposals in the
157:United States Postal Service
60:Origins of universal service
7:
796:(5). Elsevier BV: 352–369.
456:Broadband universal service
434:
138:which he introduced in the
94:the claims made and adding
10:
930:
338:
307:Breakup of the Bell System
281:Communications Act of 1934
275:Communications Act of 1934
272:
269:Communications Act of 1934
18:
914:Telecommunications policy
790:Telecommunications Policy
736:John, Richard R. (1999).
668:Communications of the ACM
252:Willis Graham Act of 1921
193:service" originated with
50:Postal Services Directive
19:For the news agency, see
781:Mueller, Milton (1993).
659:Mueller, Milton (1997).
285:Federal Radio Commission
190:history of the telephone
161:Private Express Statutes
322:Bell System divestiture
859:FCC: Universal Service
492:Universal Postal Union
446:Universal Service Fund
386:
378:
346:Universal Service Fund
185:
165:Universal Postal Union
680:10.1145/245108.245119
384:
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183:
709:Pool, Ithiel de Sola
226:Kingsbury Commitment
195:Theodore Newton Vail
396:The figure shows a
149:General Post Office
34:, whose goals are:
387:
379:
186:
136:Uniform Penny Post
79:possibly contains
722:978-0-262-16066-7
610:978-1-57230-425-3
258:Willis Graham Act
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81:original research
27:Universal service
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314:Eugene V. Rostow
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697:on 2017-11-11.
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498:on 2009-07-24
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674:(3): 39–47.
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903:Categories
833:2024-09-15
767:2024-09-21
648:§ 151
574:2010-09-15
553:2009-06-14
551:Retrieved
529:2009-06-14
502:2009-06-14
462:References
415:Efficiency
88:improve it
810:0308-5961
754:0894-6825
688:0001-0782
243:By 1913,
230:antitrust
155:(now the
92:verifying
762:23703321
711:(1977).
435:See also
429:Lifeline
318:AT&T
245:AT&T
134:and the
625:Pub. L.
339:Funding
128:concept
86:Please
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633:73–416
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207:slogan
786:(PDF)
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385:Fig.2
377:Fig.1
806:ISSN
750:ISSN
717:ISBN
684:ISSN
605:ISBN
256:The
126:The
798:doi
676:doi
90:by
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