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Regulatory Governance and the Implementation of Universal Service: A Comparative Study of the US and Japan
Unformatted Document Text:  Tracking Number: ICA-1-11804 Regulatory Governance and Universal Service 12 According to universal service funds program, all telecommunications carriers that provide interstate telecommunications services except the carriers that only provide international services must contribute to the cost of universal service. To date, the FCC has calculated access costs for the purpose of its universal service charges based on historic, embedded costs. Also, the agency announced that it would introduce a forward-looking cost model 13 to be used from 2001. After this date, federal payments are to be shifted gradually to 25% of the difference between forward-looking costs of high-cost facilities and a benchmark level of designated telecommunications revenues. This new approach is intended to replace the method of access deficit charges (Intven, p.50). Meanwhile, under a different and separate funding mechanism, schools, libraries, and health care providers are eligible for discounted telecommunication services (§ 254(g)). Universal Service at the State Level The remaining 75% of universal service costs is collected at the state level. The collection of these costs falls under the jurisdiction of state regulators such as public utility commissions. Each state may allow carriers to use a different mechanism. The state regulatory agencies have authority to impose universal service programs consistent with FCC principles and the implementation of the programs has been the subject of various regulatory and judicial appeals (Intven, p.49). Historically, most states have relied on inter-service cross-subsidies by the LECs to promote their universal service plans. Many state regulators are now moving to replace internal cross-subsidies with a central high-cost fund at the state level. These funds will collect contributions from carriers operating in each state in proportion to each carrier’s share of revenues (Intven, p.50). Universal Service in Japan In Japan the modern concept of universal service is much recent one, but several laws that include provisions related to universal service can be found from the Public Telecommunications Law (PTL) enacted after World War II. 14 As Hayashi (1997) explains, the purpose of the PTL seems deferred payment schedule for these charges. For more details, see http://www.fcc.gov/cgb/consumerfacts/universalservice.html . 12 The Lifeline Assistance program provides certain discounts on monthly service for qualified telephone subscribers. These amounts range from $5.25 to $7.85 per month, depending on the actions of authorities in each state. For more details, see http://www.fcc.gov/cgb/consumerfacts/universalservice.html . 13 For more details for the forward-looking cost model, see Crandall and Waverman (2000), Ch. 7. 14 The PTL said the purpose of it in its Article 1 that “This law is aimed at improving public welfare, by securing NTT-PC (Nippon Telegraph and Telephone Public Corporation) and KDD (Kokusai Denshin

Authors: Park, Namkee.
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Tracking Number: ICA-1-11804 Regulatory Governance and Universal Service 12
According to universal service funds program, all telecommunications carriers that
provide interstate telecommunications services except the carriers that only provide international
services must contribute to the cost of universal service. To date, the FCC has calculated access
costs for the purpose of its universal service charges based on historic, embedded costs. Also, the
agency announced that it would introduce a forward-looking cost model
13
to be used from 2001.
After this date, federal payments are to be shifted gradually to 25% of the difference between
forward-looking costs of high-cost facilities and a benchmark level of designated
telecommunications revenues. This new approach is intended to replace the method of access
deficit charges (Intven, p.50). Meanwhile, under a different and separate funding mechanism,
schools, libraries, and health care providers are eligible for discounted telecommunication
services (§ 254(g)).
Universal Service at the State Level
The remaining 75% of universal service costs is collected at the state level. The collection of
these costs falls under the jurisdiction of state regulators such as public utility commissions. Each
state may allow carriers to use a different mechanism. The state regulatory agencies have
authority to impose universal service programs consistent with FCC principles and the
implementation of the programs has been the subject of various regulatory and judicial appeals
(Intven, p.49). Historically, most states have relied on inter-service cross-subsidies by the LECs
to promote their universal service plans. Many state regulators are now moving to replace
internal cross-subsidies with a central high-cost fund at the state level. These funds will collect
contributions from carriers operating in each state in proportion to each carrier’s share of
revenues (Intven, p.50).
Universal Service in Japan
In Japan the modern concept of universal service is much recent one, but several laws that include
provisions related to universal service can be found from the Public Telecommunications Law
(PTL) enacted after World War II.
14
As Hayashi (1997) explains, the purpose of the PTL seems
deferred payment schedule for these charges. For more details, see
http://www.fcc.gov/cgb/consumerfacts/universalservice.html
.
12
The Lifeline Assistance program provides certain discounts on monthly service for qualified telephone
subscribers. These amounts range from $5.25 to $7.85 per month, depending on the actions of authorities
in each state. For more details, see
http://www.fcc.gov/cgb/consumerfacts/universalservice.html
.
13
For more details for the forward-looking cost model, see Crandall and Waverman (2000), Ch. 7.
14
The PTL said the purpose of it in its Article 1 that “This law is aimed at improving public welfare, by
securing NTT-PC (Nippon Telegraph and Telephone Public Corporation) and KDD (Kokusai Denshin


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