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Universal Service To Universal Access
© 1995 - International Research Center


Our most successful experiments with universal access have been with telephony and broadcasting. And now more homes have TV sets than have indoor plumbing. And an extremely high percentage of homes have telephone services, even in poor and rural areas. To the extent that that service approaches universality, the value to every customer is enhanced. To the extent that digital services available over broader bandwidth connections become as crucial to the America of the next century as telephone service has been during this last half-century, the definition of Universal Service should expand. Just as with telephony, the higher the percentage of homes and businesses that can access and afford a connection to the so-called information superhighway, the more valuable that resource is to every home and every business.
-- Al Gore, Vice President of the United States, in Forbes ASAP, December 4, 1995

Arizona is in the midst of vast change driven by advances in telecommunications technology. In the last decade, telecommunications and technology companies have provided new means of information delivery and human interaction, new types of investment and infrastructure, new reliance and expectations on the part of consumers and businesses alike. The next decade promises more of the same. The bandwidth of fiber optic cable, the flexibility of wireless signal delivery, the ubiquity of the personal computer as information appliance, the great global net of interconnectivity will drive the evolution of new applications, markets, governmental responsibilities and even social structures beyond what most may imagine.

As basic phone service became more common and access to it became increasingly important to modern life, the desire to make that access available to all lead to the development of Universal Service in telecommunications. For most of this century it has aided rural communities as well as low income and disabled individuals to enjoy the benefits of basic telephone connectivity with its ability to reach out to the world beyond. The definition of Universal Service has remained relatively stable until recently. The rapid pace and scope of developments in telecommunications are forcing a reevaluation as the marketplace moves towards deregulation, the number of competitors increase, and more advanced services are developed and deployed. Access to Information Age services and resources is becoming as important today as access to basic telephony was in earlier times. Thus, the concept of Universal Service must evolve in order to continue aiding those segments of the population with special needs.

Today, we struggle to operate under the legal framework of laws, regulation and court decisions that oversaw the telecommunications industry in a simpler and more stable era. Now increasingly outmoded

for the more complex environment in which we find ourselves, some of the necessary changes become evident. With a multiplicity of market entrants and methods of telecommunications service delivery, the dismantling of some long standing government oversight and control is necessary to reduce the regulatory burden and let markets develop and flourish. However, there remain areas in which government must still protect the public interests, where the government must review and renew its delivery of services and finally, where the government must reengineer itself, utilizing modern models and tools, to meet these needs in a cost effective manner.

The purpose of this study, as mandated by the Arizona Legislature in 1995, is to inform and guide the Legislature and other public policy participants in developing Arizona's telecommunications policy by:

To determine the current state of Universal Service and the best thinking on its future, International Research Center interviewed Commissioners or senior staff members from the Public Utility Commissions of each state and the District of Columbia. These interviews provided a wealth of data on the current programs, pending changes and future thoughts of each states' regulatory scene. Individual state reports may be found in Appendix E, but the comparison and analysis of these interviews combined with state demographic data appears in the section Universal Service Around the Nation.

To augment this regulatory focused perspective, we reviewed a vast array of published literature, consisting of books, articles, position papers and industry analyses to glean current thinking and trends on Universal Service and related issues. In addition, many government agencies, industry trade associations, telecommunications providers, academic and public policy institutes were contacted to provide background, references, publications and their current thinking. We incorporated that material throughout this document and provide appendixes containing the bibliography and a telecommunications policy resource guide to aid further investigation in this rapidly evolving environment. In addition, we invited position statements from over a hundred organizations and enterprises, resulting in thirty submittals representing a wide variety of views and interests, available for your review in Appendix D.

An analysis is presented of the importance of telecommunications infrastructure and applications to regional economic development, the prosperity derived from developing and retaining high technology industry, and the rise of the virtual corporation. Then, to better enable the public policy reader to look beyond the horizon, we survey Data Points, Trends and Portents, showing the range of services and applications now available, their market penetration, likely competitive entrants, and what one might expect to see in the future. Hopefully, this will prove an aid in understanding the increasingly vital role advanced telecommunication services is coming to play in the life and livelihood of the average citizen.

The expected adoption of rules next year by the Arizona Corporation Commission should establish a formal and well structured Arizona Universal Service Fund that is designed to accommodate the entry of competitive providers into the local exchange market. Arizona will join some 16 other states with well established programs. Notably, some states have expanded the scope of Universal Service by utilizing excess revenues or fines imposed on carriers for service quality issues, to fund access to advanced services. Arizona should pursue its ability to act in a similar manner. Pending Federal legislative and Federal Communications Commission initiatives may soon play a significant role in tuning and redefining the traditional Universal Service concept, though it remains unlikely that they will sufficiently broaden its reach to incorporate a full range of advanced telecommunication and information applications.

The individual states can take the initiative in the transition of Universal Service to Universal Access by promoting the availability of public information, always essential to the fostering of democracy and development, as well as insuring access to such information and advanced telecommunications services to their rural communities and to their public institutions, and through those institutions to the citizenry at large. States can not provide or fund all the necessary advances and should look to public-private partnerships to help advance the deployment of services and the ubiquity of access desired. States can also foster market-sensitive approaches by policies that reduce regulatory barriers and by designing incentives to encourage service providers and market forces to bring new services to the broadest possible consumer base, retaining to as great an extent as possible equity in available services and costs across rural as well as urban areas.