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Universal Service To Universal Access
© 1995 - International Research Center



The Arizona Corporation Commission (ACC) has new rules pending that will establish a formal and well structured Arizona Universal Service Fund (AUSF). Upon approval next year, Arizona will join some 16 other states with similarly well defined and established programs. The ACC's rules define "basic local exchange telephone service" in a manner consistent with other states and retain the intent to equalize for rural areas the cost and quality of basic service, the most fundamental tenet of Universal Service. Notably, these rules anticipate the competitive entry of providers in the local loop market, spreading the contributions to the fund across all providers of basic local exchange service (as an access line surcharge) and providers of intrastate toll service (as a percentage of intrastate toll revenues). The movement from "study areas" to the more precisely defined and smaller U.S. Census Blocks, combined with the availability of approved subsidies to competitive providers on a per customer basis will encourage (but not insure) competitive entry into the high-cost areas of the state.

The impact of Federal legislative and Federal Communications Commission initiatives may well drive new scope, criteria, and responsibilities down to the state Public Utility Commission (PUC) level. The pending Federal-State Joint Board will be empowered to redefine Universal Service in terms of what minimum services it should guarantee and how they are to be funded and administered. Whether advanced information services are included in a new basic service definition or whether specific rural or public institution infrastructure funding or incentives for such services will develop, remains to be seen. The state Public Utility Commissions will certainly retain significant oversight and management, but a range of possible new directions including a "voucher" system to high-cost subscribers, block grants to the states, new calculation methodologies for geographic areas and cost basis (perhaps with proxy factors), will drive near continuous adaptation for the foreseeable future. The Arizona Corporation Commission should look to organizations such as the National Association of Regulatory Utility Commissioners (NARUC) and the National Regulatory Research Institute (NRRI) for ongoing insight to the changes occurring, model regulations and programs, as well as how state PUCs around the nation are handling the federally driven evolution of Universal Service.

Over a dozen states are "thinking out of the box" of traditional Universal Service, in that through state PUC administered rate cases or fines placed on carriers, excess earnings and penalties are being collected and applied to advanced information services development, infrastructure and deployment. These substantial pools of funds (ranging up to $500 million in Georgia) are being used to fund Internet connections for schools and libraries, distance learning applications, telemedicine and citizen access programs, as well as rural telecommunications infrastructure development. In light of the inevitable shrinking of Federal dollars to fund such initiatives, it is recommended that the Arizona Corporation Commission survey their legal structure, rules and situation to determine whether such funds could be similarly accumulated or negotiated for in Arizona and invested in these kinds of advanced information services and access. If prohibited by existing factors, the ACC and the Legislature should consider steps to enable and encourage pursuit of such telecommunications reinvestment.

Rural telephone rates and infrastructure development have been at the core of Universal Service as rural areas with their lower population densities and greater interconnection distances have always encompassed the majority of high-cost subscribers. Just as programs in rural electrification aided the development of infrastructure for electricity and telephony, rural datafication is needed today. The new realities of economic development are not based as much on land or natural resources as in the past, but rather on human resources, the skills and education of a region's workforce. As physical transportation of goods is displaced increasingly by the delivery of services, aided by the conveyance of data and information, the availability of adequate telecommunications infrastructure is becoming as important as the highways and railways of yesteryear. Promising technological advances will aid equality of service cost and capabilities, but as always, rural deployment will lag urban areas and attract fewer competitive entrants. The subsidized connection of schools, libraries and health facilities will offer a safety net for those who can't afford their own personal connections to the National Information Infrastructure. They may then get direct access at public locations or at least the benefits of their educators and health care providers having such access. Distance learning, telemedicine and videoconferencing can allow the utilization of specialists and experts on an as-needed basis from remote locations, expanding the base of knowledge and expertise available.

Even as available Federal funds shrink, many current programs will yet continue and some new ones will be initiated. For example, the USDA's Rural Business Telecommunications Partnership Loans and Rural Telemedicine Grant Program are developing and expanding while the NTIA continues its ambitious grant programs. Industry is also stepping in, particularly the high technology sector, shifting their public service contributions to educational and infrastructure projects. These amounts can be significant as with AT&T's recent announcement of $150 million for K-12 Internet connectivity and services. Regional initiatives such as the Western Governor's Association SmartStates offer collaboration and leverage by partnering with other states in the development and deployment of applications and services. It is recommended that the Governor's Office of Telecommunications Policy take the lead in identifying such public and private programs, qualifying the likelihood of Arizona participation, disseminating the pertinent information, fostering coalitions of participants and facilitating the necessary response and follow-up. Only through such coordinated and concerted effort can we expect Arizona to fully participate in these programs and funding sources.

The strength of democratic institutions and governments is founded on the rights of its constituents to be aware of its doings and remain well informed, so as to form opinions, express their viewpoints, and incorporate those perceptions and information into the fabric of their life and livelihood. Government initiatives and dissemination of a wide range of information also serves the needs of its business community and fosters economic development. Every state in the union has begun to offer its records and resources in electronic form to aid in its own operation, to better serve its citizens and to protect and foster the public interests. We recommend that the Governor's Office of Telecommunications Policy and the state's Chief Information Officer undertake to determine the range of information resources provided by states and localities and their manner of funding, management and delivery. Further, it is hoped they will benchmark the "best practices" among states, consider where public-private partnerships may prove effective and beneficial, and recommend coordinated and progressive Arizona development in this area. The Legislature can then consider enabling and promoting future progress by mandates, incentives and coordination of funding.

In moving to make a wide-range of state government information and resources available electronically and recognizing the growing importance to modern life of accessing these and the wealth of other information assets and the ability of electronic communication to foster communities of interest, the state must also consider the means of citizen access. It is here that the long-held social compact providing Universal Service to insure access to basic telephony must evolve to a concept of Universal Access to best preclude information have-nots in the Information Age. For the citizens who live in high-cost areas or who cannot invest in the equipment and services to provide such access, the state should encourage, enable and/or provide the means of access at a community level. This may to some extent be served by the competitive telecommunications marketplace in an increasingly deregulated environment, but should also be aided by incentives or programs for the connection of schools, libraries, health institutions and the fostering of community networks.

The ideals of inclusion basic to Universal Service have always gone beyond rural access to also embody aid to the low-income and disabled segments of our population. Appropriate assistive technology must be incorporated into any and all information access initiatives to insure that every citizen may participate and benefit. Consideration should be given to e-mail as a new "basic service" enabling participation in the sending and receiving of electronic messages. Though civic networks and both public and private institutions may provide electronic mailboxes at low or no cost, the means of remote access from community level resources should be provided to best serve low-income and mobile populations.

As the National Information Infrastructure extends its reach, capabilities and importance, Arizona, with its current initiatives, high technology industry base and electronically literate citizenry, is well positioned to take advantage of the transformation from the Industrial Age to the Information Age. The premises of traditional Universal Service remain valid today, but the scope and expectation must evolve to a broader concept of Universal Access as we undergo a paradigm shift in citizen's use of telecommunications.

Electric circuitry has overthrown the regime of "time" and "space" and pours upon us instantly and continuously the concerns of all other men. We now live in a global village.
-- Marshall McLuhan, 1967