Universal Service and Technology Development in the United States
Commissioner Gloria Tristani
U.S. Federal Communications Commission
before the
Central American and Caribbean Forum on Universal Service
Santo Domingo, Dominican Republic
February 16, 2001
(as prepared for delivery)
Thank you for that kind introduction. It is a great pleasure to join you today to discuss an issue close to my heart: promoting policies to ensure that all people benefit from the communications revolution. I want to thank Indotel President Orlando Jorge Mera for convening this forum for policymakers and for inviting me to share the U.S. universal service experience.
Nelson Mandela once said, "For the 21st century, the capacity to communicate will almost certainly be a key human right." "Our children," he continued" "are our greatest asset and it is our responsibility to give them the skills and insight to build information societies of the future." As policymakers, we can help to steer this inspiration into a reality, and your presence here today underscores that this vision transcends borders.
We are all familiar with some of the technology developments that are expanding access to the Information Age. Today's advancements are mind boggling, to say the least. Fiber optics and multiplexing technology have expanded capacity and slashed the cost of long-haul transport, be it intercontinental or transoceanic. And on the customer end of the network, last-mile technologies such as DSL and cable modems are pumping broadband into end user terminals. Meanwhile, wireless services represent a leapfrog technology dismantling the barriers of distance, time, and terrain. And satellites are providing two-way, high-speed Internet access spanning transnational footprints.
These technology breakthroughs do far more than enrich our lives, enhance productivity, and generate economic benefits. They offer the building blocks for a truly accessible, ubiquitous communications network spanning all reaches of the globe. These communications platforms can bridge the twin divides of remoteness and poverty that isolate peoples from the benefits of the Information Age. They can transmit information and applications that will alter how people communicate, teach, care for the ill, and earn livelihoods. Simply put, they can deliver solutions that can change lives.
Of course, any discussion of universal service or coverage naturally begins with the simple question, how should we characterize the concept of universal service? The simple answer is we can't. There can be no single approach appropriate for all nations. Universal coverage, moreover, should include different capabilities for different programs. But allow me to identify a two-fold mission: extending affordable basic telephone service to unserved communities and consumers and expanding delivery of advanced services so that all peoples may benefit from the Information Age.
The goals of universal coverage are many and varied. For starters, universal access - access to communications within a reasonable distance - is realistic in some areas, while universal service to households may be attainable elsewhere. While voice-grade access may be an appropriate level of supported service to the home, broadband links for Internet and data may be suitable in a community-wide setting.
Once the goals are determined, a variety of programs can achieve them. Some focus on remote areas, others target low-income customers, while still others address a specific societal goal such as improving education or health. Funding can be derived from within the telecommunications sector or from general revenues.
My remarks this morning will focus on the U.S. experience: the core principles we've identified to guide a universal service policy, the specific programs we are implementing, and some examples of how technology convergence is helping to achieve our objectives. The U.S. experience is but one, and let me be the first to say that it's far from perfect. I do believe, however, that it includes a variety of approaches that increase access to the benefits of the communications revolution.
Universal service has a long history in the United States. When Congress created the FCC back in 1934, it charged the new agency with a fundamental goal: ". . . to make available, so far as possible, to all the people of the United States, without discrimination on the basis of race, color, religion, national origin, or sex, a rapid, efficient, Nation-wide and world-wide wire and radio communication service with adequate facilities at reasonable charges."
For many years, universal service support mechanisms have helped make telephone service affordable for low-income consumers and consumers who live in areas where the cost of service is high. In a monopoly environment, this system involved implicit support mechanisms including long distance to local subsidies, business to residential subsidies, and geographic rate averaging.
In 1996, Congress overhauled the telecommunications landscape. The Telecommunications Act of 1996 adopted the twin goals of promoting competition and universal service. Reform was essential to preserve and advance universal service in a competitive environment. The 1996 Act also added explicit support for schools, libraries and rural health providers, in addition to high cost areas and low-income consumers. To achieve this end, Congress and the Commission developed core principles to guide universal service policies. These include:
Since adoption of the 1996 Act, the Commission has preserved and advanced universal service with these principles in mind. Carriers contribute to the federal universal service fund based on a percentage of their interstate and international end-user telecommunications revenues. The percentage is set by formula on a quarterly basis; currently it is about 6.7 percent. These funds pay for four major programs.
The high cost program provides support to carriers offering telephone service in high cost areas. There are different levels of support depending on the size of the carrier and the cost of service within a specific area. For example, small carriers - those with less than 200,000 lines in a region - receive greater amounts of support than carriers with more than 200,000 lines. This program is funded at about $2.5 billion per year.
Low-income support consists of two programs: the Link-Up America program, which helps qualified low-income consumers by paying one-half of the initial hook-up fee, up to $30; and the Lifeline Assistance program, which reduces the monthly service charges up to about $8, including state assistance. These programs are funded at about $500 million per year.
The schools and libraries program, also known as the E-rate program, provides discounts on the purchase of telecommunications services, Internet access and internal connections. Eligible schools grades K-12 and libraries negotiate with service providers for the best and most cost-effective package of services, and then apply for discounts ranging from 20 to 90 percent depending on the income level and whether the school or library is located in a rural area. The program is funded at $2.25 billion per year.
The rural health care program encourages the growth of telemedicine in rural areas by making telecommunications rates for public and non-profit rural health care providers nearly the same as those paid in urban areas. The goal is to make advanced telecommunications affordable for rural health providers - to provide equal health care for all Americans. This program is funded at about $400 million per year.
With the help of these programs, about 94 percent of American households have basic telephone service; more schools and libraries have Internet connections and over 1 million classrooms have been wired; and rural health care providers can afford to collaborate with urban medical centers. Without the universal service program, there's no question that such connections would be fewer and farther between.
Though these programs have done much, last year we concluded they could do more for our most isolated population, Native American Indians. Telephone subscribership among Indians living on reservations averages only around 47 percent, and some tribes report penetration levels below 20 percent. There are many reasons why subscribership is so low on tribal lands, including the high cost of basic service in such locations, the limited local calling areas, inadequate infrastructure, and the high concentration of low-income individuals. To expand subscribership on Indian tribal lands, we expanded Lifeline so that income-eligible individuals can receive basic local phone service for $1 a month. We also increased LinkUp assistance up to $100 per eligible individual. And recognizing the importance of wireless alternatives for serving remote tribal lands, we adopted a bidding credit in upcoming spectrum auctions for wireless carriers that pledge to deploy facilities and offer service to tribal areas that have penetration rates below 70 percent.
We have sought to respond to competitive and technology developments of the last few years by creating a universal service program with flexibility for a variety of players and platforms. Allow me to share a few stories from our experience in the United States.
As you all are well aware, wireless solutions are "leapfrogging" existing wireline networks all over the world. Wireless subscriber growth has exploded as consumers respond to competitive alternatives and the benefits of mobility. Wireless services are also connecting isolated or sparsely populated communities that are unserved or underserved. A wireless local loop often can be more easily introduced and more cost effective than a wireline link. Under the FCC's rules, these wireless loops are starting to put to the test the universal service principles of technological neutrality and portable support.
In Puerto Rico, for example, Centennial Communications is providing a wireless local loop service with the aid of universal service support. Telephone subscribership in Puerto Rico ranks far behind the nation's 50 states, hovering around 75 percent. The island's mountainous terrain is in part responsible for the wireline network's limited buildout. I am all too familiar with this story having grown up en La Isla del Encanto. Well, in 1999, Centennial began operating a fixed wireless local loop service using their PCS spectrum. Today, they have 20,000 customers, many of whom had no service prior to Centennial. Centennial applied for universal service support, and they receive on average a per-line amount of $7.50.
Western Wireless is another carrier committed to offering wireless local loop service. Western Wireless has launched wireless local loop in over 50 rural and remote communities in six states. These communities have populations from 100 to 5,000. Western Wireless expects to receive it first universal support in the near future.
In the rural health care program, satellite services have enabled the practice of telemedicine in some of the most isolated country in the United States. The Maniilaq Health Center in the Northwest Borough of Alaska is a great example. The Borough is nearly the size of Guatemala and has a population of 7,500. Eleven villages have between 100 and 1,000 residents. The Borough has no roads connecting it with the rest of the world, and no roadways connecting any of the villages with each other. A new medical facility was recently constructed in Kotzebue, the regional economic center, but the villages only have small health clinics supported by limited staff. With the help of the universal service rural health care program, the Maniilaq Association has upgraded the connections between village clinics and the health center from phone lines to broadband satellite service that delivers digital images and live video. Doctors in Kotzebue report that the live video has enabled them to "virtually" guide the delivery and care of newborns and to treat traumas.
Looking ahead, new technology is constantly spurring new projects - and new questions - about universal service.
I recently met with a group planning a Mobile Breast Care Center that will deliver digital telemammography to Native American women in Indian country. Nearly 5 percent of Native American women undergoing their first mammography screening have suspicious findings. This project will bring real-time examinations and immediate follow-up to these at-risk women who otherwise might not be tested or receive follow-up care. The project is currently lining up a satellite provider to link the mobile mammography machine to doctors in Maryland and intends to use universal service funds to defray the cost of the communications link.
In addition, the FCC is examining the future of universal service. We recently initiated an inquiry into whether the high cost and low-income programs should cover a broader range of services beyond voice-grade service, access to interexchange, emergency, operator, and directory assistance services, and other core services. The 1996 Act offers specific guidance on this issue, and I expect we will look closely at those factors. More broadly, universal service funding issues will continue to be examined as services migrate to Internet-based platforms. The evolution of the communications market will result in the evolution of universal service as well.
These are just a few examples of universal service technology developments in the United States. As I noted earlier, our experiences are but one example. Many of you have your own compelling stories about the impact of new entrants, new technologies, and new cabinas publicas, infocentros, and telecentros. I look forward to our discussion.