Tristani: Should There Be Universal Service for the Internet?

(September 11, 2000) FCC Commissioner Tristani gave a speech in Washington DC on September 7 in which she advocated redressing various digital divides. She concluded by asking whether universal service should cover the Internet.

Federal Communications Commission (FCC) Commissioner Gloria Tristani was the keynote speaker at a convention sponsored by the Leadership Conference on Civil Rights (LCCR).

The conference was titled "Civil Rights, Communications, and Internet Technology Forum: Working Toward A Comprehensive Civil Rights E-Agenda." It was held all day on Thursday, September 7, at the Washington Hilton and Towers. Commissioner Tristani gave the keynote luncheon address, which she titled "Civil Rights in the Digital World."

Commissioner Tristani devoted much of her prepared remarks to the e-rate, which is a part of the FCC's implementation of Section 254, the section of the Telecom Act of 1996 which codified universal service programs. She asserted that there are a number of digital divides that need to be redressed by government.

She concluded her prepared remarks by stating,

"And one final question, should the universal access to the telephone of the past century be extended to the technology of the digital century? Groups like the Leadership Conference on Civil Rights are critical to answering these questions. I urge all civil rights and public interest advocates to engage us in the debate on communications policy. Washington needs and America deserves your input."

She also stated that "We cannot afford to become a society of information 'haves' and 'have-nots' in a world in which the ability to access and manipulate information is the currency of the day."

The notion of universal service began with the first Chairman of the old Bell monopoly, Theodore Vail. Although, to him it meant that his company should be the only phone company. Since the 1920s a different notion of universal service has dominated federal regulation of telephone service. It is the idea that everyone should have a telephone.

It is based on the theory that if government regulation can bring down the prices for phone service, thereby leaded everyone to be able to afford it, and use it. However, rather than have the Congress impose a tax to fund a universal service program, the Congress left it to the FCC to mandate a series of cross subsidy programs. That is, the FCC required the old Bell monopoly to price business service above its cost and price residential service below its cost, overprice long distance service and underprice local service, overprice urban service and underprice rural service, and so forth.

Economists have debated whether or not any of these efforts have accomplished any of the goals. To this day, phone service is not universal, while television ownership (which is not subsidized) is nearly universal.

Nevertheless, universal service is wildly popular with some Members of Congress who vigorously defend those cross-subsidies that are designed to benefit their constituents. Among the staunchest supporters are Representatives and Senators from rural and mountain states, where the cost per household of installing phone lines is the highest.

The Congress codified universal service in Section 254 of the Telecom Act of 1996. It provides that "Quality services should be available at just, reasonable, and affordable rates." This section also created a new category of universal service to subsidize advanced telecommunications services for schools and libraries.

The FCC implemented this section, and much more, by creating the e-rate program, which taxes phone users to subsidize phone service, Internet service, and computer networking for schools and libraries. (There is also a similar, although much smaller, program for rural health clinics.)

However, with the exception of the e-rate subsidizes for Internet access and networking at schools and libraries, universal service remains a telephone program, not an Internet program.

Gloria Tristani

Commissioner Tristani's question, if answered in the affirmative, would change all this.

Commissioner Tristanti's prepared text stopped just short of advocating universal service for the Internet. However, she made lengthy arguments about the need to close various digital divides. These are the same types of arguments that have long been used to justify universal service for telephones.

She argued that there is a need there to close the gap between those rich and poor, between whites and blacks and hispanics, and between urban and rural.

"Our responsibility to encourage deployment of advanced services is to all Americans, whether they live in the suburbs, the farms, the reservations, the inner cities, or outside the continental United States. We must take the necessary steps to ensure that the populations that we have identified as vulnerable and at risk, do not become digital have nots," said Tristani.

She also argued that there is both a divide in access to the Internet, and a divide in broadband access to the Internet:

"The FCC’s most recent report to Congress on broadband rollout concluded certain populations are 'particularly vulnerable to not receiving advanced services in a timely fashion.' "

Commissioner Tristani also addressed other issues, including low power FM radio and the FCC's rules regarding hiring on the basis of race, which were held unconstitutional by the U.S. Court of Appeals in 1998.