Universal Access - History and Future

Last month, the Daily Yonder offered a short history of Universal Service in telecommunications in the U.S. Due to the high costs of providing services in many areas of the country, private network owners have never demonstrated an interest in providing universal service, leading to various government initiatives to expand access to telecom networks.

One of the reasons we support publicly owned networks is because we strongly believe in universal service. Universal access to fast and affordable broadband is an important goal for a variety of reasons, not the least of which is its potential to democratize and enhance educational opportunities.

Readers of this site undoubtedly recognize why fast and affordable access to broadband is important to people in rural areas. What is often forgotten is why people who already have access to such broadband should care about extending access to those who don't yet have it -- aside from simply caring about fellow Americans.

There are actually self-interested reasons why everyone should support extending networks into rural areas. Perhaps the best reason is something called the "network effect" which refers to the principle that the value of a network increases as more users join. One example of this is the telephone, where a telephone network becomes more valuable as more people are on it - allowing subscribers greater access to each other.

Another benefit rooted in self-interest is analogous to benefits of rural electrification. When publicly owned electrical networks electrified the country-side, new markets were created as people with electricity began buying appliances, creating a demand for more products and services. Though the effect may not be as strong with broadband, the new technologies will create new markets, creating more opportunities for everyone.

I do not suggest these self-interested motivations are the sole or best reasons for universal service, but I also want to make sure they are part of the discussion because we all benefit by ensuring everyone has access to these essential infrastructures.

To return to the Daily Yonder piece, it notes the beginning of universal service (and also the importance of "interconnection"):

The concept a universal service originated in the early days of the telephone industry, between 1894 and 1912, after Alexander Graham Bell's patents had expired and before the federal government granted the Bell company "natural monopoly" protections. As Martin Mueller points out in his book "Universal Service," during this period of open competition, scores of telephone providers raced to set up networks and overcome Bell's considerable lead. But Bell refused to connect its networks with those of the independent providers; as a result, subscribers found themselves unable to connect with subscribers from other competing local exchanges. At the time, the only way to resolve this division was to subscribe to both the Bell network and the local independent network. This solution (of sorts), known as "dual service," was generally affordable only for businesses.

In 1907, there was a push to force interconnection between these proprietary networks. That was the first meaning of "universal service."

The article offers interesting details of how perceptions and policies changed, leading up to the 1996 Telecom Act:

Under the 1996 Act, the FCC was explicitly tasked with ensuring that such basic telephone services should be available "at just, reasonable, and affordable rates," and that the list of services covered under the universal service provision be periodically updated to reflect new technological developments. The 1996 Act also acknowledged the uneven geographic distribution of services and sought to correct this inequality by stipulating that consumers in rural areas be provided with telecommunications services at a level of quality and at rates "reasonably comparable" to those available in urban areas.

We may take ubiquitous electrical and telephone networks for granted, but they were a conscious decision. And as we move forward with universal service, we must push for public ownership to properly align incentives. The public should own the networks to ensure everyone is properly served while allowing independent service providers to compete for subscribers. Universal access -- with freedom of choice between providers. It is possible and should be our goal.