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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 15 Universal Service toward the New Age From the mid 1990s, there have been many discussions about universal service and telecommunications market conditions in Japan. For example, in 1996 the Information Technology and Communications Policy Forum (ITC Forum) emphasized that MPT should take a more market-oriented attitude and the rate system at that time should evolve into a more cost- based one recognizing that the problem would be particularly serious in the islands and in remote areas where population density was low and costs of network construction were high (Hayashi, pp.210-211). Prior to the ITC Forum, MPT began investigations on universal service and tariff structures by organizing a private study group to report to MPT. In its 1996 report, the study group proposed four principles to expand universal service. They are a) to secure access through dynamics of market mechanism, b) step-by-step approach, c) transparent and stable support mechanism, and d) development and promotion of public application by governments. Also, the study group suggested releasing NTT from universal service obligations, since competition is expected to prevail in every field of telecommunications. Finally, it tried to compare the methods of universal service and among the three methods mentioned above, the universal service fund was recommended because the group thought that an access charge system would not workable if there is a dominant local carrier. However, Lifeline and LinkUp type assistance were not examined (Hayashi, pp.212-213). Based on these discussions and recommendations, according to an MPHPT report (2001), MPHPT (former MPT) tried to complete the method of calculating costs for providing universal service and establishing the universal service fund before the revision and enforcement of the new Telecommunications Business Law in 2001 (p.2). The revised TBL specified the funding mechanism of universal service and it looks similar to that of the US. The specific provisions of the universal service fund are as follows (MPHPT, 2002, pp33-34). a. For ensuring the provision of universal service, a new system (Universal Service Fund) shall be introduced where telecommunications carriers are required to shoulder the fair cost burden. b. Under the new system, telecommunications carriers providing universal service may be designated as Eligible Telecommunications Carriers (ETCs) followed by application of those carriers. c. ETCs may receive universal service supports as a part of financial compensation for the cost of universal service provision. d. In order to provide for the universal service support, telecommunications carriers interconnecting with ETCs’ facilities for providing universal service shall be required to shoulder reasonable contributions for the provision of universal service.

Authors: Park, Namkee.
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Tracking Number: ICA-1-11804 Regulatory Governance and Universal Service 15
Universal Service toward the New Age
From the mid 1990s, there have been many discussions about universal service and
telecommunications market conditions in Japan. For example, in 1996 the Information
Technology and Communications Policy Forum (ITC Forum) emphasized that MPT should take a
more market-oriented attitude and the rate system at that time should evolve into a more cost-
based one recognizing that the problem would be particularly serious in the islands and in remote
areas where population density was low and costs of network construction were high (Hayashi,
pp.210-211). Prior to the ITC Forum, MPT began investigations on universal service and tariff
structures by organizing a private study group to report to MPT. In its 1996 report, the study
group proposed four principles to expand universal service. They are a) to secure access through
dynamics of market mechanism, b) step-by-step approach, c) transparent and stable support
mechanism, and d) development and promotion of public application by governments. Also, the
study group suggested releasing NTT from universal service obligations, since competition is
expected to prevail in every field of telecommunications. Finally, it tried to compare the methods
of universal service and among the three methods mentioned above, the universal service fund
was recommended because the group thought that an access charge system would not workable if
there is a dominant local carrier. However, Lifeline and LinkUp type assistance were not
examined (Hayashi, pp.212-213).
Based on these discussions and recommendations, according to an MPHPT report (2001),
MPHPT (former MPT) tried to complete the method of calculating costs for providing universal
service and establishing the universal service fund before the revision and enforcement of the new
Telecommunications Business Law in 2001 (p.2). The revised TBL specified the funding
mechanism of universal service and it looks similar to that of the US. The specific provisions of
the universal service fund are as follows (MPHPT, 2002, pp33-34).
a. For ensuring the provision of universal service, a new system (Universal Service Fund)
shall be introduced where telecommunications carriers are required to shoulder the fair
cost burden.
b. Under the new system, telecommunications carriers providing universal service may be
designated as Eligible Telecommunications Carriers (ETCs) followed by application of
those carriers.
c. ETCs may receive universal service supports as a part of financial compensation for the
cost of universal service provision.
d. In order to provide for the universal service support, telecommunications carriers
interconnecting with ETCs’ facilities for providing universal service shall be required to
shoulder reasonable contributions for the provision of universal service.


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