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Universal Services: Can the Market Support It?

Molka, Judith A (1994) Universal Services: Can the Market Support It? Technical Report. School of Library and Information Science, University of Pittsburgh, Pittsburgh, PA.

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The Communications Act of 1934 has asserted Universal Telephone Service to be a national social good and has mandated the Federal Communications Commission to provide for it. Economic mechanisms developed for the provision of this service have worked well in markets with a single service provider. The economic methods include geographic cost averaging, old members of the network subsidizing the cost of new entrants, and the interexchange market subsidizing universal access programs. Many predict these approaches will become less effective in markets with multiple service providers. Large local exchange carriers predict the evaporation of provider surplus in a competitive market. They also anticipate persistence in average cost pricing practices will create opportunity for "cream skimming." This paper will present the current definition of Universal Service based on historical record, FCC policies, and on what services the average residential American has. Some discussion will be given to how the current definition may be expanded. Changes to the required scope of services are likely to compound the need for a change in the Universal Service cost recovery system. This paper reviews the existing system and looks at two new tax proposals for raising revenues and revising the system. Finally, it is proposed, new Universal Service cost recovery plan should take into consideration the distribution of welfare in the market. A study of provider pricing strategies is proposed. The purpose of the study would be to discover optimal or near optimal provider pricing strategies. Information gained from such a study, such as, where market surplus is likely to reside should more successfully allow for the inclusion of Universal Service goals in normal market operations.


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Item Type: Monograph (Technical Report)
Status: Published
CreatorsEmailPitt UsernameORCID
Molka, Judith A
Monograph Type: Technical Report
Date: March 1994
Date Type: Publication
Access Restriction: No restriction; Release the ETD for access worldwide immediately.
Publisher: School of Library and Information Science, University of Pittsburgh
Place of Publication: Pittsburgh, PA
Institution: University of Pittsburgh
Department: School of Library and Information Science
Schools and Programs: School of Information Sciences > Library and Information Science
Refereed: No
Other ID: LIS053/IS94002
Date Deposited: 03 May 2013 21:24
Last Modified: 20 Dec 2018 00:55


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