by
Jorge Reina Schement
Penn State University
Rutgers University
Rebecca R. Pressman
Rutgers University
Laurance Povich
Federal Communications Commission
This paper was presented at the conference on "Universal Service in Context: A Multidisciplinary Perspective," held at New York Law School, December 6, 1995
The authors acknowledge the valuable contributions of Milton Mueller of Rutgers University.
Jorge Reina Schement: (908) 932-7919; 932-6916 fax
Rebecca R. Pressman: rebeccap@eden.rutgers.edu
Laurance Povich: (202) 418-0953
The purpose of this paper is to propose an outline for a new universal service policy that will achieve maximum opportunity to participate in the channels of democratic discourse, and in the economic life of the nation for all Americans.
All Americans must participate in the information age to carry forward the promise of democracy in America. As more of society's essential functions relocate within the new information infrastructure, effective access will determine whether one engages in the information age or remains at the margin. Thus, the guarantee of access to the new information infrastructure represents the opportunity for all to participate in the main discourses of society; and so stands well within the spirit of democratic participation.
The essence of the call for maximum participation in the new information infrastructure stems from the basic assumption that all members of society contribute to its wealth. The opportunity to contribute is a right that no member should be denied. The measure of our success will be found in the decision of every citizen to participate. In a democratic society our goal is to maximize the contribution of every person, and the choice each citizen makes. The language chosen and the volume is of little consequence; what is significant will only be diminished when the whole excludes some of the parts.
Of the hundreds of studies concerned with universal service, only a few address telephone penetration; the vast majority focus on issues relating to cross-subsidy supports for universal service. Consequently, those few studies on telephone penetration cannot be considered literature in the traditional sense of a cumulative and self-critical body of work. Nonetheless, these studies reflect several themes that have become conventional wisdom in telecommunications policy discourse.
Until recently, there has been a consensus that the current telephone penetration rate per household of approximately 94 percent provides evidence of the success of long-term universal service policy.1 Furthermore, though most authors express some concern for those without phones, until the early 1990s the weight of opinion seems to have been that existing subsidy programs adequately included all those that could reasonably be connected.2 Most recently, the information policy community has exhibited interest in the social dynamics of those without telephone service and have pointed to poverty-related factors as causes of phonelessness.3
Recent research has expanded in three ways the factual and theoretical bases for formulating universal service policy. First, in tandem with the work done by the FCC and the developers of the NII, recent research has sharpened the collective portrait of the 6.2 million Americans who do not have telephones in their household.4 This portrait compiled by this data is of a young rather than elderly person and an inner-city rather than rural resident, with a low rather than high household income.5 Also, people without phones are statistically less likely to be employed and statistically more likely to be either black or Hispanic, renters, not homeowners, and female heads of households with children.6
Second, by exploring the reasons why people do not have phones, recent research has provided the factual grounds for challenging a conventional tenet of universal service policy. This tenet states that universal service should be focused on providing access to local telephone service at affordable rates. In contrast, research, whether it is conducted in New Jersey, Texas, or Kansas, consistently shows that people are driven off the phone network by the costs which result from using the phone and not by the costs of basic service. The results from these three places show that: 8 of the 12 households surveyed in Camden lost telephone service because they developed large phone bills which they were unable to pay; 57 percent of the 172 people surveyed in Texas said that the cost of long distance calls made service difficult to afford, and 37 percent of the people surveyed in Kansas strongly agreed that long distance charges were the reason their phone service was disconnected.7 Similar studies performed in Washington, DC and California are consistent with these results.8
Third, some recent research has suggested that different social groups create different combinations of media to meet their needs. In Camden, four of the eight households without telephone service had cable service and six of the eight households had VCRs.9 In Texas 40 percent of the people without phones had cable service and 95 percent owned televisions.10
Fourth, the studies already referred to suggest that access to telephone service is sometimes an on-again, off-again relationship. To give two examples, a majority(54 percent) of the Texas respondents without phones had been connected in the past three years; and, of the six households in Camden with phone service, four households had previously lost their phone service.11 Although more research is necessary on this question, this evidence may explain the fluctuations in reported levels of telephone penetration. It also suggests that the goals of universal service should be broadened to encompass continued access to the network, if increased penetration is to be thought of as a main objective.
The growing consistency of research on universal service indicates that those at the margins of society are particularly vulnerable to isolation and its socioeconomic consequences as a result of lacking access to a telephone.12 A person who does not have a phone is not going to be able to use a modem and a computer to gain access to the NII. Thus some of the same groups that tend to be without phones, minorities and the poor, do not have the means to contribute their voice and participate in the construction of the NII and will not be able to use it.13
These new studies, and their refocused concern for those at the margins, constitute the empirical source of the call to rethink universal service goals in light of the emergence of a new information infrastructure.
Unexpected Uses of Media as an Argument for Expanded Universal Service
We have evidence that, in some instances, household heads have rejected telephone service. In some cases, heads of low-income households have incurred toll charges that stressed their ability to remain economically solvent, where the telephone represents one more unbearable cost. For some households, especially those in inner cities, the telephone offers a channel whereby undesirable peers may contact a child in the household and encourage the use of drugs or involvement in crime. For many poor households, threats to the household from agencies with claims against the household are often delivered by telephone, resulting in an unwillingness to invest in phone service. Yet if there is no telephone in the household, the members experience severe difficulties gaining employment.
On the other hand, we have indications that households are willing to invest in cable -- sometimes instead of telephone service -- because of cable's high-use value given their circumstances. As a choice, cable offers inexpensive entertainment that is more cost effective than any other comparable expenditure. The many hours of entertainment available via cable provide more satisfaction to more members of the household than do the discrete phone calls that constitute telephone service; complete cable service, including the additional tiers, serves as an enticement to keep children at home and away from the dangerous streets of the neighborhood; and to households with few comforts, cable offers a visible sign of material well-being.14
That some households decide to forego telephone service in favor of cable TV has led newspaper columnists, social critics, and academics to wonder if such choices represent cultural irrationality and dysfunction; after all, can the banality of cable ever hold greater value than the utility of the telephone? The answer to this question usually results in exasperation. But as the respondents themselves have indicated, their forced choices must be seen against a context of survival options. Furthermore, the reality is that people integrate the information environments of their homes. No medium stands, or is used, in isolation. Therefore, on what basis can one decide which to exclude and which to receive? The answer is there is no single answer. Social class, race, income, geography, and gender influence decisions regarding the shape of the information environment of the home, and no policy maker can predict the optimal environment configuration for all Americans.
In the latter part of the century especially, individualism and fragmentation characterize the social dynamics of households. The decline in the sum total of household members and the multiplication of single person households means that the cohesiveness of the family system no longer holds in growing numbers of living situations. In households with small children, media are often employed as baby-sitters. Older children request and receive the technology necessary to play video games and listen to music, while parents invest in systems allowing the children to play and listen without encroaching on the parents' use of media.
For single person households, similar motivations prevail. The person living alone tends to consume information in order to supplement human interactions. One radio and one television does not suffice since company is needed in the bedroom as well as in the living room. And, with no one else to buy for, a solitary individual can indulge his or her tastes for large CD, video, and/or computer game collections. For that matter, interactive media will probably gain their earliest adherence among singles, since they have more discretionary time. Cruising the Internet is an ideal activity when there is no competition for attention from a spouse or child. Thus, the very imagination of what constitutes access varies across the demographic landscape.
Indeed, the convergence of information technologies has not meant homogeneity of household information environments, access, nor consensus on the meaning of democratic discourse. Instead, the plethora of information goods pouring into the market will lead to greater disparities in household experiences as income differences influence the ability to participate in the NII. The continuing debate regarding the gap between the information haves and have-nots testifies to an implicit acceptance of this reality.
Our goal should not be limited by the technological present, for we are in short supply of a tool to enable and achieve the value and benefit of a fully participatory democratic society. What we do know is that the nation is a stakeholder, and that the number of participants will grow exponentially as the barriers to entry are eliminated. Today we have the opportunity to open doors to equipment not yet named or manufactured, and spectrum use not yet discovered. The following social goals will guide us into this territory not yet charted.
Democratic discourse. The sum total of evolving information technologies and telecommunications policies should protect, facilitate, and expand democratic discourse.
Economic opportunity. Americans should be empowered economically by telecommunications systems. In the optimal system, the providers will be equal players within an integrated regulatory regime. Technologies will be substitutable and their regulatory burdens will be equal. Ultimately, the adoption of policies that result in lower prices for everyone will insure universal service.
Interconnectedness. Telecommunications policy should serve to connect all Americans to each other and to the rest of the world. Americans should experience benefits that can save lives, create jobs, and give every citizen the chance to pursue the full spectrum of life.
The basic propositions.
Universality. The information infrastructure must offer the opportunity for
interconnectedness to all Americans. The goal should be to reach all Americans
within a reasonable timetable.
Affordability. Access to the information infrastructure must fall within the means of all Americans. The rate structure should aim at maximizing the number of participants.
Interactivity. As the information infrastructure undergoes structural realignment, the government should broaden technological standards to include interactive audio and video.
Maintenance. Continued access to the network is related to costs of usage, such as long-distance and toll calls. Universal service policy should address the problems associated with usage costs to maintain high levels of penetration.
Content. Information necessary to enable basic participation in democratic discourse, and in economic life, should be available to all at a reasonable price.
Personal Choice. Americans should enjoy the freedom to choose
the configuration of access technologies and information services that
constitutes the optimal universal service for their individual circumstances.
Underlying policy values and considerations.
Improvement. Any new broad social policy must lead the way to a
better life.
Inclusiveness. The new universal service must be inclusive in order to maximize the benefit to the nation.
Continuity. The existing domestic electronic environment must be the technological foundation for further developments.
Initiative. Most Americans believe that private enterprise is superior to public enterprise, which leads to the expectation that government interventions into the affairs of the marketplace should only occur as an exception, or as a last resort. Thus, government's role in the development of the new environment should be mindful of this deeply held belief and function as a partner with business.
Themes that will set the context for the ongoing national
discourse.
Convergence. In the new environment, policy that focuses on
content, sometimes called information policy, and policy that focuses on
delivery, sometimes called telecommunications policy, will become intertwined.
The seamless web of telecommunications technologies, already unfolding, will make
and insistence on distinguishing between channel and content artificial and
unrealistic.
There is a general expectation that cable and wireless technologies will merge in their delivery capabilities. Concern focuses on several possibilities. What are the consequences of the merger of the corporations that deliver these services? What is the proper regulatory paradigm for traditional cable and alternative content/transport providers as potential common carriers subject to universal service regulations? What is the proper regulatory paradigm for telecommunications as an institution responsible for content? Who protects the generation of content by the public?
Participation. The new networks and the information that they carry are seen as the means to enable citizens to contribute more fully to the public debates that affect their lives. This notion goes beyond political discourse to include discourse involving social, economic, and religious values.
Equal access. There is a concern that, for a variety of techno-socio-economic reasons, some portions of the public will be unable to enter the information infrastructure on an equal footing. On the one hand, the value of the new information infrastructure will depend on each person's ability and skill in its use. On the other hand, there exists the potential that an interconnected and interactive network will change the definition of common carriage, as the envelope and the message become inseparable and are redefined through their use.
Fairness and Justice. The evolution of the NII is perceived by many groups as a test of the fairness and justice of the American system. That is, there is concern that the NII go beyond the status quo and include groups that have traditionally experienced exclusion, such as the physically disabled, non-English speakers, Native Americans, and ethnic and racial minorities. Among some groups, there is also concern that the new information infrastructure empower the disenfranchised; therefore, for them the test is in whether the new information infrastructure will be able to improve the lot of the groups they support.
Privacy. The invasive character of electronic information leaves many Americans feeling uneasy. They fear that they will be harmed by the unscrupulous use of information pertaining to their private lives. Government is seen as both perpetrator and protector.
Information Redlining. Among citizen groups there exists the fear that telcos, and cable companies will ignore poor neighborhoods in their haste to connect the more profitable segments of a community. Such a strategy aimed at meeting the needs of wealthy communities first might exacerbate the gap between the haves and the have-nots.
Competition. The providers of services have expressed persistent concern that they be treated equally as competitors. For the most part, they see that substitutable services should be regulated neutrally -- that is, without prejudice -- as national and local barriers to entry are eliminated.
Intellectual Property. For many, the new information infrastructure is a boundless frontier where great fortunes will be made (and lost). The promise of profit is so strong, that property protections will have to accompany any public policy.
The Federal-States Partnership. A necessary tension exists between the federal government and the states. Opening competitive initiatives and creating new structures along the NII require consensus, cooperation, and partnership.
State laws and regulations could, of course, be used as a tool for increasing levels of telephone penetration. Presently, most states require written advance notice of varying time periods as a prerequisite for disconnection. The notice requirement helps ensure procedural due process but is basically irrelevant to the economic issues which cause disconnection unless the extra time allows the customer to find sources for payment. Also, many states offer exemptions from disconnection if an emergency (usually medical) situation exists. This requirement prevents disconnection in cases of "extreme hardship" but once again is irrelevant to the socio-economic issues which cause disconnection.
Some states, however, have policies which may have the effect of increasing levels of telephone penetration. Six states require the telephone company to offer the option of an installment payment plan to the customer. Eleven states prohibit the telephone company from suspending current local service for delinquent long-distance service.
Social contract for the information age.
What bargain does government strike with citizens in the information society? In
effect, universal service stands for the social contract of the information age.
The evolving structure of universal service policy should include open access,
democratic equality, and competitive neutrality. Then it will provide maximum
benefits at the lowest possible cost. Regulators should not impose a choice
between expensive and very expensive bytes. Rather, they should provide a market
structure which allows for choice, use, and all creative possibilities. The
regulatory platform should include possibilities for schools, health care,
libraries, public safety, and economic security.
Ultimately people will lead. Any new formulation of universal service should maximize choice and the opportunity for ingenuity. When people are free to choose, they will choose for themselves and invent choices -- regardless of what the policy elite thinks they should do. The new universal service should maintain continuity with the policy past and break new ground. We suggest the following introduction to the provisions of a new commitment to universal service.
To make available, so far as possible, to all of the people of the United States a rapid, efficient, nation-wide, and world-wide information and communication network with meaningful access at reasonable charges, for the purpose of promoting democratic discourse, economic welfare, the national defense, as well as safety of life and property.15
1. The Current Population Survey of the Bureau of the Census gives a figure of 93.3 percent penetration, while the 1990 Census gives a figure of 94.8 percent. For the purposes of this paper, we have chosen 94 percent as an interpolated estimate. (September 1993). Current Population Survey, March 1993. Washington DC: U.S. Department of Commerce, Economics and Statistics Administration, Bureau of the Census, p. 9-3.
2. Booker, E. (1986). "Lifeline and the low income customer: Who is ultimately responsible?" Telephony, 210(20), 116-132. Dordick, H. S. (1990). "The origins of universal service." Telecommunications Policy, 14(3), 223-238. Dordick, H. S., & Fife, M. D. (1991). "Universal service in post-divestiture USA." Telecommunications Policy, 15(2), 119-128. Gilbert, P. (1987). Universal service on hold: A national survey of telephone service among low income households. U.S. Public Interest Research Group. Hills, J. (1989). "Universal service: Liberalization and privatization of telecommunications." Telecommunications Policy, 13(2), 129-144.
3. Hausman, J., Tardiff, T., & Belinfante, A. (1993). "The effects of the breakup of AT&T on telephone penetration in the United States." The American Economic Review, 83(2), 178-184. Perl, L. J. (1983). Residential demand for telephone service 1983 No. 1). National Economic Research Associates, Inc. for the Central Services organization, Inc. of the Bell Operating Companies. Schement, J. R. (1995). "Beyond universal service: Characteristics of Americans without telephones, 1980-1993." Telecommunications Policy, 19(6), 477-485. Williams, F., & Hadden, S. (1991). On the prospects for redefining universal service: From connectivity to content Policy Research Project: The University of Texas at Austin. Williams, F., & Hadden, S. (1992). "On the prospects for redefining universal service: From connectivity to content." Information and Behavior, 4, 49-63.
4. Federal Communications Commission (1995, May). Monitoring report: CC Docket No. 87-239. Washington, DC.
5. Schement, J. R. (1995). "Beyond universal service: Characteristics of Americans without telephones, 1980-1993." Telecommunications Policy, 19(6), 477-485. Horrigan, J. B. & Rhodes, L. (1995). The evolution of universal service in Texas. Austin, TX: Lyndon B. Johnson School of Public Affairs. Southwestern Bell Telephone Company (1987, May). Economic analysis of subscriber line charges. St. Louis: MO.
6. Schement, J. R. (1995). "Beyond universal service: Characteristics of Americans without telephones, 1980-1993." Telecommunications Policy, 19(6), 477-485. United States Department of Commerce (1995). Falling through the net: a survey of the "have nots" in rural and urban America. Washington, DC.
7. Mueller, M. & Schement, J. R. (1995). Universal service from the bottom up: A profile of telecommunications access in Camden, New Jersey. New Brunswick, NJ: Rutgers University Project on Information Policy. Horrigan, J. B. & Rhodes, L. (1995). The evolution of universal service in Texas. Austin, TX: Lyndon B. Johnson School of Public Affairs. Southwestern Bell Telephone Company (1987, May). Economic analysis of subscriber line charges. St. Louis: MO.
8. Chesapeake and Potomac Telephone Company.(October 1993). Telephone penetration project: Door-to-door survey. Washington DC: Author. Field Research Corporation(1993). Affordability of Telephone Service: Volume 1 Non-customer survey.
9. Mueller, M & Schement, J. R. (1995). Universal service from the bottom up: A profile of telecommunications access in Camden, New Jersey. New Brunswick, NJ: Rutgers University Project on Information Policy.
10. Horrigan, J. B. & Rhodes, L. (1995). The evolution of universal service in Texas. Austin, TX: Lyndon B. Johnson School of Public Affairs.
11. Horrigan, J. B. & Rhodes, L. (1995). The evolution of universal service in Texas. Austin, TX: Lyndon B. Johnson School of Public Affairs. Mueller, M. & Schement, J. R. (1995). Universal service from the bottom up: A profile of telecommunications access in Camden, New Jersey. New Brunswick, NJ: Rutgers University Project on Information Policy.
12. Furthermore, regional differences seem to interact with ethnicity and income to produce dissimilar levels of penetration. Schement, J. R. (1995). "Beyond universal service: Characteristics of Americans without telephones, 1980-1993." Telecommunications Policy, 19(6), 477-485.
13. United States Department of Commerce (1995). Falling through the net: A survey of the "have nots" in rural and urban America. Washington, DC.
14. See Mueller, Milton and Schement, Jorge Reina [1995] Universal Service from the Bottom Up: A Profile of Telecommunications Access in Camden, New Jersey, New Brunswick, NJ: Rutgers University Project on Information Policy.
15. The similarities to Title I of the Communications Act of 1934 are intentional. See, for example, Title I -- General Provisions, Section 1 [47 U.S.C. 151].
www.benton.org/Policy/Uniserv/Conference/transcend.html
Last updated: 9 December 1996 mkh