Universal Service

Background

Universal service aims to provide essential and affordable telecommunications and utility services to all consumers. The rates for these services should be just, reasonable, and affordable. All consumers should receive service that meets their daily needs at a reasonable price. And no one should have to choose between necessities—such as medicine and food—and needed telecommunications and utility services.

Telecommunications—federal law established universal service as a goal more than 80 years ago. The Telecommunications Act of 1996 updated that goal to include advanced telecommunications and information services. The act attempted to ensure access to those services through just, reasonable, and affordable pricing. Since then, broadband has become more essential to society and the economy. In 2011 ubiquitous broadband service became a universal service goal (see also Broadband Internet Services section of this chapter).The federal Universal Services Fund subsidizes service to high-cost areas, consumers with low incomes, schools, libraries, and rural health care facilities. The fund is supported by a surcharge to telecommunications companies. That cost is then passed on to consumers. The size of the fund, and the resulting surcharge on bills, has grown dramatically in recent years. Most states also have their own funds.

In March 2016, the Federal Communication Commission overhauled the universal service program, including the Lifeline program, which provides discounted service for consumers with low incomes (See this chapter’s section on Assistance Programs—Lifeline). The ruling expanded the Universal Services Fund’s support mechanism to include voice and broadband service in the Lifeline program.

Energy—lawmakers have not adopted an explicit universal service policy for household energy services despite the need for one. It is particularly clear during difficult economic times. When energy prices are high or volatile, the size of home energy bills can increase dramatically. Households can accrue past-due penalties which places them at risk of disconnection. Public health, safety, and welfare are compromised when customers are unable to pay energy bills, and utilities respond by disconnecting service. In states that have opened retail energy markets to competition, consumers are more at risk. However, in most of these states, regulation ensures the option of standard offer service (also known as “provider of last resort service” or “default service”) at stable rates.

UNIVERSAL SERVICE: Policy

Basic services for all

In this policy: FederalState

Policymakers should ensure affordable and reliable access to essential communications and utility services for all.

Energy services

In this policy: FederalState

Federal and state policymakers should ensure that essential energy services are affordable and available to all households. Federal and state policymakers should establish a definition of “universal service” for the energy industry that is similar to the one in the Telecommunications Act of 1996. It should explicitly state that rates must be just, reasonable, and affordable and that energy assistance programs should be available to households with low incomes. Regulators should periodically collect and report uniform data on arrearages, disconnections, and reconnections from all electric and gas utilities to determine the effects of market conditions, higher energy prices, weather conditions, and utility and regulatory policy and practices on customer health, safety, and welfare.

Determining the size of the universal service fund (USF)

In this policy: FederalState

Regulators should use forward-looking (i.e., efficient) cost models to determine the size of the USF.

Distributing universal service funds among states

In this policy: Federal

Policymakers should ensure that universal service funds are distributed fairly and equitably among the states.

Limiting growth in the USF

In this policy: Federal

Federal policymakers should conduct a thorough audit of all service providers that receive high-cost funding.

Public communications points

In this policy: StateLocal

Policymakers should encourage the deployment of WiFi kiosks and other innovative technologies to replace aging payphone infrastructure and otherwise ensure that public communications access points are available where needed for public health, safety, or welfare.

Universal service support to providers

In this policy: FederalState

Policymakers should ensure that only fully qualified providers capable of and committed to providing universal service receive support and that cost recovery occurs in a manner that is fair and equitable to all consumers, including those with low incomes.

Federal policymakers should require fair and equitable universal service contributions from all providers of telecommunications or information services that benefit from the public network and universal service programs and that compete with existing universal service contributors.

Federal and state policymakers should apply a revenue-based methodology to determine a provider’s contribution to the preservation and advancement of universal service.

Policymakers should ensure that all carriers recover their universal service contributions in a manner that is fair and equitable to all consumers, including those with low incomes.