Introduction
The WWW continues to grow exponentially. As it grows, its influence becomes more and more powerful. Things thought impossible just a few years ago ... such as collaborating with someone across the world in a real-time manner ... are starting to become taken for granted. Already the internet and proprietary networks are being used to communicate new ideas and thoughts throughout the world.
Think of this class for example: the WWW is not only an essential source of course readings and information but also a vital forum through which we discuss and refine our ideas. After learning about an issue in class, I can, with a simple click of a button, send a note to my congressman letting him know how I feel about how he's doing. In short, the WWW represents an entirely new way of learning and communicating. As information and knowledge flows across boundaries the world will certainly become a better place.
But will everyone be able to share in this new world? How many people will be left behind because they do not have the tools or training to exploit it? How can we make sure that society does not become divided between those who are familiar with computer technology -- those who were lucky enough to have a computer in their bedroom as they grew up, for example -- and those who are not?
Many people are suggesting that the concept of universal service -- which assured that virtually every American household has a phone in it -- be expanded to cover the new digital world. These advocates say that universal service will assure that technologies with such great promise as the WWW will be the bond that ties society closer together rather than further tearing it apart.
This paper will examine the notion of universal service as it applies to proposed legislative reform. First, I will briefly define universal service as well as provide some history behind this concept. I will then describe a framework -- based on the history of other similar concepts -- to use to understand the different arguments for universal service. I will then identify the key criticisms of universal service. Finally, I will apply this understanding of Universal service to the telecommunications reform legislation being considered today.
Brief History of Universal Service
This week the 45 member joint Senate/House Conference Committee will begin the formidable task of merging the two versions of proposed U.S. Telecommunications Reform Acts [S.652 and H.1555] into a single bill to present for President Clinton's signature. Among the many topics which this Committee will have to address Universal Service has been identified as critical to achieving the Administration's National Information Infrastructure vision. The Universal Service story, however, does not begin with this proposed legislation. Its history goes way back into the early part of this century.
The notion of Universal Service was first introduced by Theodore Vail [the chief architect of the Bell System] in 1907. Vail's desire to have "one policy, one system, and universal service" may have reflected less an enlightened business philosophy than a desire to "achieve political support for the elimination of competition and the establishment of regulated monopoly." [21] Nonetheless, a perhaps more altruistically inspired notion of universal service was drafted into United States law with the Telecommunications Act of 1934. This Act authorized the FCC to regulate interstate and foreign communications "so as to make available, so far as possible, to all the people of the United States a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges." [8]
Universal Service has historically been limited to voice-grade Telephone service [Plain Old Telephone Service]: "The fundamental objective has been to give all Americans an opportunity to pick up the telephone and at a reasonable cost, have a voice conversation with anyone else in the country or, increasingly, the world." [8] By 1993 the telephone penetration rate into homes was 94% compared with 35% in 1934. The affordability of local voice communications has been maintained through the use of cross-subsidies from business and long-distance telephone bills. Total costs of these subsidies have been estimated to be anywhere between $6-16 billion a year. [23]
Extension of the Universal Service Concept
The increased proliferation of telecommunication options, combined with the increased value of information has caused many people to investigate the possibility of extending the definition of Universal Service beyond Plain Old Telephone Service. It has been proposed that Universal Service be extended to cover anything from touch-tone, 911 coverage, hearing-impaired services and long-distance access to voice, video and data services--in short from 'telecommunication' to 'information' services. Much of the S.652 and H.1555 Universal Service Debate centers around how far to extend the concept of Universal Service (as well as how to enforce Universal Service in deregulated, local telecommunications markets).
A Framework to Analyze Universal Service Options
Before examining the alternative calls for the extension of Universal Service, it is helpful to establish a framework to classify the different proposals. Sawhney suggests that, like the other calls for universal services in U.S. history (e.g. Public Education, Universal Suffrage, Railroads, Electricity, etc..), "the discourse about universal service takes place at three levels: Individual, Social System and Humanity." [20]
The justification for extension of universal service on Individual grounds stems from the fact that certain services are basic human rights. This argument, if effective, is quite powerful: "once access to a service is accepted as a right, the cost-benefit equation becomes a secondary consideration. The society is then obligated to extend the service to everyone irrespective of cost." For example, Individual Rights arguments were used to justify public education ("...all children are entitled to equal education") as well as electric utilities ("...to bring Electronic Sunshine to all American homes, and with it the confidence that the rights of the humblest citizens are being protected"). [20]
The basic idea behind the Social Benefit argument is "that the provision of a service on a universal basis makes it possible for the social system as a whole to function more efficiently." The Social Benefit argument states that if the overall benefits of a service to society outweighs its costs, it should be adopted. The Social Benefit argument was used during the universal education debates, for example: "Why does the state take money from your pocket to educate my child? Not on the ground that an education is a good thing for him, but on the ground that his ignorance would be dangerous to the state." [20]
The Humanity argument is not as mechanistic as the Social Benefit argument. "It is ecclesiastical. The aspiration is to facilitate the union of humanity...[To help develop]...the threads that tie all of us together." A good example of the Humanity argument, occurred in the justification of railroads investments. Railroads were cited as having "the potential of reuniting 'the human race that had been dispersed at the time of the building of the Tower of Babel.'" [20]
Information Have and Have Nots:
Individual and Societal Justifications for Universal Service
Recent focus has been given to the growing disparity between those who can utilize information services and those who cannot--between the "Information Haves" and the "Information Have Nots". Statistics concerning computer usage have been used to support both an individual and societal justification for the extension of Universal Service to information services. The NII Agenda for Action, for example, states that the United States "cannot accept a division of our people among telecommunication 'haves' and 'have-nots'." [8] The National Telecommunications and Information Administration [NTIA] elaborates: "While a standard telephone line can be an individual's pathway to riches of the Information Age, a personal computer and modem are rapidly becoming the keys to the vault." [5] Never one for understatement, Representative Markey [D-MA] perhaps best illustrates this argument: "...I fear we face a disturbing trend that could lead to a debilitating result for the country in informational apartheid." [24]
Who Uses Computers?
Computer usage in American households has grown exponentially: "Out of a total 98.6 million households in October 1993 there were 26.5 million [26.9%] -- representing 69 million Americans -- with personal computers, up from 13.7 [15%] million in 1989 and 6.9 million [8.2%] in 1984...Of households with computers, 9.19 million [34.7%] had modems, up from 3.25 million [23%] in 1989." [11--Civille]
A household's income, education-level and location are the greatest predictor of whether they will be computer owners [the information "haves"]. The percent of U.S. Households with computers varies significantly with these predictors:
Percentage of U.S. Households with Computers/Modems
Urban Rural Central City
$15-20,000 11.0 (32.4) 12.6 (30.7) 13.0 (28.3)
$50-75,000 46.0 (46.7) 48.4 (49.8) 47.4 (49.2)
4 years H.S. 16.5 15.3 12.2
4 years+ 51.2 50.7 47.0
College
Note: Number in parenthesis is the percentage of computers with modems. [5]
What are Computers Used For?
Those who argue that it is wrong to have "information have nots" cite the significant number of households which are using computers as part of their education, job-search, and socialization=2E Many surveys of computer usage support these claims ; though, admittedly it is difficult to prove a lack of polling bias...A 1994 Times Mirror survey of computer usage reports that "Among PC owning households, 75% of adults reported that children of all ages in the home often or sometimes used their computer for school work compared to 64% who said the children played games." Of those who subscribe to on-line services, other uses while on-line include: electronic mail (53% use e-mail often/sometimes); on-line forums (32%); news, weather, and sports (28%); information for hobbies (29%); financial information (24%); travel information (18%); and play games (17%). [14]
Return to the Information "Have Not" Debate
Those who call for universal service using the Information "Have Not" justification often point to the two-tier society developing in America. They identify the increasing gap between the upper class and the lower class and attribute this division to the fact that there are those who have the tools and skills to compete in the information economy and those who do not: "It is not at all surprising that this trend [of networked information services accelerating at higher income and education levels] parallels a ten-year trend in widening income gaps as the information economy becomes more pervasive." [11--Civille]
In a manner similar to the calls for public education in the 1800s the Information "Have Not" advocates suggest that either it is a natural right for all citizens to have access to information tools (the individual argument) or that it is in the best interest of society to have all of its members using information tools (societal argument). Those taking the societal stance either talk about the network externalities associated with having everyone connected or about the fact that it is vital to a successful economy to have workers available with the proper level of "network literacy".
A 'network externality' occurs when a good's value increases the more people use it: "Basically stated, the value of a network depends on the number of people who can be reached through that network. A corollary of the law holds that the value of an individual network connection is greater than the individual private value (which in some case is less than the cost) because the connection increases the value to others on the network." [11] Thus the principle of network externality could theoretically be used to justify subsidies for computer technology for lower-income individuals.
The information 'have not' argument argues that in addition to possible network externalities, society would also greatly benefit as more of its members become 'network literate'. Network literacy is described as the ability to identify, access, and use electronic information from a network. The particular skills include: "an understanding of how to search for, browse, and retrieve desired materials and how to manipulate networked information with other resources to add value." According to the Secretary of Labor's Commission on Acquiring Necessary Skills, the high-performance worker required by tomorrow's information economy will have to include among their skills: the ability to "acquire and evaluate data, organize and maintain files, interpret and communicate, and use computers to process information." Not only would the value of a network to society increase with more people connected, but society would be much more economically competitive if its members were skilled in the use of information tools. [11]
A Renewed, Enhanced Sense of Community/Democracy:
The Humanity Argument for Universal Service
For many advocates of Universal Service the argument in its favor goes beyond mere economics and individual rights. For example, one of the founders of the pioneering regionally-based on-line community, The Well, writes: "I am convinced that computer networking involving group dialogue...has a value to our society far beyond what can be measured by economics alone." In short, this argument postulates that having everyone connected would bring about a renewed, purer sense of community and democracy and thus move humanity forward. [11--Odasz]
Advocates of the humanity argument most often focus on the possibility of the net being used by individuals who desire to develop and share ideas with others. Users of network technology become more than mere information processors but instead "social beings...not only looking for information...[but also] looking for affiliation, support and affirmation." Several attributes of electronic gatherings represent enhancements over physical gatherings: "[1] Physical location is irrelevant to participation. [2] Most participants are relatively invisible. and [3] The logistical and social costs to participate in electronic gatherings are quite low." [11--Sproull and Faraj]
The Debate
We have thus seen (1) there clearly is a wide gap between those who have access to information technology and those who don't; (2) "network literacy" is a fundamental requirement of the high-performance worker of the future and (3) network technology may be a force which improves society. There is fundamentally little disagreement about these observations. The central debate concerns (1) whether a policy of "Universal Service" is an appropriate response to these issues and (2) If a policy of Universal Service is appropriate, where do we begin?
Cost of Services
Before we consider the Universal Service debate, however, let us briefly review the costs of providing switched broadband to every American home. Even though we have seen that two of the above arguments try to circumvent any cost-benefit analysis, it is clear that in an era of such governmental down-sizing the cost issue cannot be ignored.
Cost estimates, however, are extremely difficult to arrive at. They vary plus or minus hundreds of billions of dollars! The General Accounting Office cites estimates as high as $500 billion to build the infrastructure required to connect every home [7]; while other economists such as George Gilder estimate this cost at $100 billion. Still others claim this price-tag will be as low as $20 billion if wireless technologies are exploited for rural areas. [16] These estimates do not even include the cost of providing the equipment (e.g. computer) required to hook into the network or the cost to maintain the infrastructure once it is installed.
Clearly there is a significant cost to provide broadband to every American home. This cost cannot be ignored when considering extending Universal Service. Nonetheless, when compared to the annual capital expenditures of the telecommunications industry ($100 billion) it does seem realistic. Furthermore, Universal Service would only have to cover a portion of these costs. Most of the costs would be covered by those who can afford the technology. Universal Service funding would only apply to the infrastructure for those who could not afford it.
Universal Service vs. Open Access
In his influential Wired article, Universal Service [An Idea Whose Time Is Past], John Browning [17] maps out the most popular criticisms of extending Universal Service to information services:
John Browning argues that since there is no longer a shortage of bandwidth the government no longer has a right to regulate what services providers offer. The government should no longer focus on regulation of services. Instead government should be focused on assuring that there is a diversity of services provided. The government would accomplish this by insuring that all providers provide open access to their infrastructure and services.
In terms of universal service, this would mean that instead of having the government focus on assuring, for example, that someone provides e-mail services (or local community discussion groups) to a home, the government should just assure that whoever provides bandwidth to a home (1) offers the same set of services to this home as they do to other homes without bundling it in with other services and (2) allows -- for a fee set by open competition -- access to anyone else who might be interested in offering a service to that home.
Continuing with our e-mail example, Browning argues, that under open access, if e-mail (or local community discussions groups) are valuable services, someone will form a business which will provide e-mail to the home. Furthermore, since there would be no barriers for someone else offering a competitive e-mail business (there is an excess of bandwidth and no one controls access to the bandwidth), the prices charged for this e-mail service would be as low as economically possible. Therefore, the government need not get involved in selecting which services should be universal to all homes. The market will figure this out for itself as long as there is open access to the bandwidth leading into America's homes.
Browning's argument continues that not only is the market capable of selecting those services but also that universal service would strangle competition. The hidden subsidies which universal service currently utilize would distort the market demand for services and bankrupt those providers who are forced to fund universal service. Additionally, service regulations would be difficult if not impossible to administer. Finally, in determining which services are universal, the government might be pushed into "the business of picking technology standards" [17], something it has historically done a poor job at.
If you accept the premise that there is an excess of bandwidth into all homes (and the requisite associated hardware), Browning's argument is quite convincing. Nonetheless, currently the premise is wrong. There clearly is not excessive bandwidth into America's homes. We may be on the advent of an excess of bandwidth into some homes, but we are nowhere near an advent of an excess of bandwidth in all homes. Browning's notion of open access does not assure universal availability of bandwidth. As does any good economist, Browning simply assumes it exists and builds a theory around this assumption. Yet that ugly problem of how to avoid "Information Have and Have Nots" still exists.
Browning addresses this problem towards the end of his paper:
"Abandoning universal service need not mean abandoning equality. On the contrary. If information services are essential and high cost is denying these services to the poor, government can give the disadvantaged the means to buy some minimum level of service -- as it does now with Medicare and food stamps." [17]
Though Browning clearly would disagree, his notion of "equality" as expressed above is no different than a limited definition of universal service. Browning offers a couple of caveats, however: the consumer should be able to choose the services not the government and the government should make explicit its subsidies instead of the hidden taxes which take place now with the Universal Service Fund.
Schools First?
Some advocates of expanding the notion of Universals Service propose starting with universal service in the schools first. This option would be significantly less expensive -- approximately $42 billion for the hardware and software by one estimate [15]. It would also not only create a demand for information services but also better prepare America to take full advantage of information services in their home.
Besides the cost of the equipment (which opponents of this proposal wonder who will fund) there would be a significant cost in training an appropriate number of teachers in the new technologies: There are approximately 50 million children in grades K-12 with a total of 2.5 million teachers in approximately 100,000 school buildings [public and private]. If not carefully orchestrated, the introduction of computers into the classroom might come at the expense of other core skills such as reading, writing and arithmetic.
On the other hand, some advocates of Universal Service suggest that starting in the schools is not enough. Is it right that some students will be able to work with computers at home and others will not? Will such an incremental approach to providing universal service ever bring information services into every American home? If information services do eventually make it into all American homes will the standards/services which were developed for those wealthy early-adopters be useful to those who might not have been able to afford the technology when it was first introduced?
Legislation should definitely be drafted to support the introduction of information services into America's K-12 schools in order to prevent a further growth of information have and have nots. The federal government, while mandating some sort of bandwidth requirement into the schools, should not set any more specific standards. They should rather provide funds from whatever Universal Service funding mechanism exists to the local districts/states to invest in whatever information services they deem most appropriate for their local needs. Most critically, however, there should be both funds set aside and specific strategies developed so to assure that the instructors in the schools will be able integrate the information technologies into their curriculum. Furthermore, there most be adequate network administrative facilities in place to support these technologies.
S.652 and H.R. 1555
As a matter of fact, the question of whether Universal Service should be extended to cover information services in schools and libraries is the very issue which is being debated in the Senate-House conference sessions on proposed telecommunications reform (among many other issues I am sure). Both versions of the bill agree that Universal Service needs to be much more carefully defined and that the funding mechanism behind Universal Service needs to be substantially reworked. Both bills propose a Federal-State joint board to look into this matter and make recommendations to the FCC and state governing boards within 270 days of the legislation's enactment. The Senate version of the Bill, however, goes much further in outlining principles and goals of universal service.
The House version for example, seems less comfortable extending Universal Service to information services. Compare the Senate's "access to advanced telecommunications and information services should be provided in all regions of the Nation" to the House's version calling for a universal service plan which "should seek to promote access to advanced telecommunications services and capabilities." [6]
Furthermore, the House version contains "no explicit recognition of public interest uses of technology, while the Senate version asserts that "citizens in rural and high cost areas should have access to the benefits of advanced telecommunications and information services for health care, education, economic development, and other public policy purposes." The Senate version also mandates that "carriers provide telecommunications services to elementary schools, secondary schools, and libraries at rates less than amounts charged for similar services to other parties" and has as a Universal Service Principle that "Elementary and secondary schools and classrooms should have access to advanced telecommunications services." [12]
Ed Markey (D-MA) is a member of the conference committee. I've let him know about how I feel. Have you?
Bibliography
[1] Access to Education, George Lucas and Sen. Bob Kerry, Wired Magazine.
[2] Beyond Universal Service, Jorge Reina Schement,
http://cdinet.com/Benton/Catalog/Working1/working1.html
[3] Congressional Press Releases, October 13, 1995
[4] The Connected and Disconnected in Rural and Urban America, Larry Irving, NTIA, 7/25/95.
[5] Falling Through The Net: A Survey of the "Have Nots" in Rural and Urban America,
U.S. Dept. of Commerce, 7/95
[6] H.R. 1555: Public Interest Issues in the House Telecommunications Legislation, 7/5/95,
http://www.cdinet.com/Benton/Goingon/HR1555.html
[7] Information Superhighway: Issues Affecting Development [Chapter Report,
09/30/94, GAO/RCED-94-285].
[8] Inquiry on Universal Service and Open Access Issues; NTIA. 1994. Notice. Federal Register Notices Vol. 59, No. 180, 48112-48121.
[9] NII Field Hearings on Universal Service and Open Access: America Speaks Out, NTIA. 1994. U.S. Department of Commerce, National Telecommunications and Information Administration. [September 1994]: 4-12.
[10] Mega-Project II: Access to the NII, Advisory Council on the National Information Infrastructure. [December 6, 1994].
[11] Public Access to the Internet, Brian Kahin and James Keller, 1995, MIT Press
[12] S.652: Public Interest Issues in the Senate Telecommunications Legislation
http://www.cdinet.com/Benton/Goingon/legislative.html
[13] S652, U.S. Senate Bill
http://www.eff.org/pub/Legislation/Bills_by_number/s652_95.bill
[14] Technology in the American Household Times Mirror Center for The People & The Press. [May 24, 1994].
[15] Testimony Before the House Committees on Science and Economic, Pat Wright, V.P. T.C.I., May 24, 1994
[16] Testimony Before the House Committees on Science and Economic, Susan G. Hadden, Chairman, Policy Committee, Alliance for Public Technology, May 24, 1994
[17] Universal Service [An Idea Whose Time Is Past], John Browning, Wired Magazine.
[18] Universal Service Does Matter, Rob Glaser, Jan. 95, Wired Magazine.
[19] Universal Service and the Information Superhighway, http://cdinet.com/Benton/Catalog/Brief1/brief1.html
[20] Universal Service: Prosaic Motives and Great Ideals, Harmeet Sawhney, Journal of
Broadcasting and Media, Fall 1994.
[21] Universal Service Policies for the Public Interest Sector, Susan G. Hadden,
http://cdinet.com/Benton/Catalog/Working3/working3.html
[22] Universal Service The Rural Challenge Changing Requirements and Policy Options,
Heather E. Hudson, Ph.D., J.D., http://cdinet.com/Benton/Catalog/Working2/working2.html
[23] A world of opinions on universal service -- Telephony, Watson and Sharon, ASAP, 1994.
[24] Luncheon Speaker at Broadcasting and Cale Magazine Telecommunications Forum, Rep. Edward Markey, 9/27/95.