Universal Service Issues Definition Availability Affordability Financing Implicit or Explicit Incumbent and/or new entrant

Availability and Affordability Availability (provider) –Geographic (high cost areas) –Economic (low income areas) –Special needs (TRS for example) Affordability (consumer) –Specific targeted group (elderly, low income) –Geographic (high cost of service)

Areas at risk Difficult terrain –Philippines with its many islands –Jungle terrain, rain forests, mountainous regions Sparsely populated areas –Northern Canada Economically poor areas –African villages, American inner cities

Financing Implicit –Cross subsidization –Averaged rates Explicit –Separate, identifiable fund –Who pays in? On what basis? –Who receives payment? On what basis? –Implications for competition?

Definition Issues Universal service versus universal access Mechanism for adding new services? Demand driven? Social and economic desirability? Technical capability

What’s included? EU Directive of 4/24/2002 –Member states must ensure that telecom services are made available to all users in their territory, regardless of geographical location at a specified quality level and an affordable price –At least one directory per year; and DA service –Public payphones—meet user needs either in terms of geographical coverage, # of telephones, accessibility to disabled or quality of service –Must ensure that disabled enjoy a service that meets their needs –May designate one or more providers –Assure affordability to low income users, either through special tariffs or special assistance; can require geographic toll averaging –Assure quality of service levels are met –Funding of universal service through public funds and/or a mechanism to share costs between providers

More on the EU Specify that emergency number (112) must be free of charge Universal service directive also provides for number portability, including mobile NRA’s must inform EU Commission the names of universal service providers ; must also provide for out-of-court resolution of disputes related to universal servcie

What’s included (continued) Canada: no formal definition; basic local with unlimited local calling for flat monthly fee, access to long distance, maintenance and repair, directory listing and a directory Australia: voice grade telephone service, 24 hours a day; 24-hour access to operator service; emergency service; public payphones; Telstra only provider

Typical policies Build-out requirements Explicit subsidies Targeted implicit subsidy obligations