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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 16 e. A non-profit organization shall be designated as Universal Service Support Institution, which is envisaged to conduct activities such as providing universal service support to ETCs as well as collecting contributions from other telecommunications carriers. f. Providing universal service support and collecting contributions by the Universal Service Support Institution requires authorization from the MPHPT. Stages of Universal Service Above I examined the current situations of universal service in the US and Japan. Before beginning to investigate the relationship between regulatory governance and the implementation of universal service, it is important to understand where the two countries’ universal service are now. Thus, here I will turn to a framework for the stages of universal service provided by Milne (1998). Based on network development, Milne highlights five stages of universal service corresponding universal service issues and often-used solutions. According to him, in Stage 1 (Network Establishment), the critical question is how to fund the necessary huge investment in networks and how to get appropriate technology and skills. In Stage 2 (Wide Geographic Reach), the main constraint to network expansion is limited demand for telecommunications services due to high price and use of alternative communications. In this stage, typical universal service goals can be geographically uniform charges and maintaining regional parity. Stage 3 (Mass Market Take-up) is characterized by growing network and there are usually waiting lists, caused by plant and manpower shortages. This stage is entered when the cost of telephone ownership becomes affordable for the bulk of country’s (middle-income) households and introducing competition calls for tariff rebalancing. In Stage 4 (Network Completion), usual telephone penetration ratio is from 75-100% and telephone becomes affordable to all. That is, the phone changes its status from luxury to necessity and telecommunications services can be adaptable to special needs at this stage. Moreover, there can be network competition and cost-oriented tariffs, and thus, typical policy measures for universal service will be targeted subsidies. Finally, Stage 5 (Service to Individuals) is still mostly conjectural because only a few countries have reached this stage. At this stage, the goal type of universal service is based on a libertarian view of the individual’s right to communicate and the typical policy goal of telecommunications is the achievement of free and fair competition. Furthermore, the notion of advanced services such as mobile, Internet, and broadband services and schools or hospitals’ access to those services becomes social needs. According to Milne’s stages, it seems that the US is in Stage 5 in which everyone can meet basic communication needs while Japan is in transition from Stage 4 to Stage 5 considering rapid

Authors: Park, Namkee.
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Tracking Number: ICA-1-11804 Regulatory Governance and Universal Service 16
e. A non-profit organization shall be designated as Universal Service Support Institution,
which is envisaged to conduct activities such as providing universal service support to
ETCs as well as collecting contributions from other telecommunications carriers.
f. Providing universal service support and collecting contributions by the Universal Service
Support Institution requires authorization from the MPHPT.
Stages of Universal Service
Above I examined the current situations of universal service in the US and Japan. Before
beginning to investigate the relationship between regulatory governance and the implementation
of universal service, it is important to understand where the two countries’ universal service are
now. Thus, here I will turn to a framework for the stages of universal service provided by Milne
(1998).
Based on network development, Milne highlights five stages of universal service
corresponding universal service issues and often-used solutions. According to him, in Stage 1
(Network Establishment), the critical question is how to fund the necessary huge investment in
networks and how to get appropriate technology and skills. In Stage 2 (Wide Geographic Reach),
the main constraint to network expansion is limited demand for telecommunications services due
to high price and use of alternative communications. In this stage, typical universal service goals
can be geographically uniform charges and maintaining regional parity. Stage 3 (Mass Market
Take-up) is characterized by growing network and there are usually waiting lists, caused by plant
and manpower shortages. This stage is entered when the cost of telephone ownership becomes
affordable for the bulk of country’s (middle-income) households and introducing competition
calls for tariff rebalancing. In Stage 4 (Network Completion), usual telephone penetration ratio is
from 75-100% and telephone becomes affordable to all. That is, the phone changes its status
from luxury to necessity and telecommunications services can be adaptable to special needs at
this stage. Moreover, there can be network competition and cost-oriented tariffs, and thus, typical
policy measures for universal service will be targeted subsidies. Finally, Stage 5 (Service to
Individuals) is still mostly conjectural because only a few countries have reached this stage. At
this stage, the goal type of universal service is based on a libertarian view of the individual’s right
to communicate and the typical policy goal of telecommunications is the achievement of free and
fair competition. Furthermore, the notion of advanced services such as mobile, Internet, and
broadband services and schools or hospitals’ access to those services becomes social needs.
According to Milne’s stages, it seems that the US is in Stage 5 in which everyone can meet basic
communication needs while Japan is in transition from Stage 4 to Stage 5 considering rapid


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