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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 7 environments. Keeping in mind this theoretical framework, I will examine the implementation of universal service in the US and Japan starting with the definition of it. Definition of Universal Service According to an OECD report (1991), universal service needs to be distinguished as two different approaches; one politico-philosophical, and the other economic. Each can lead to a different set of policy prescriptions and in fact these are often confused in policy debate (p.25). The first approach conceives universal service, defined as access to telecommunication services, as a basic right of all citizens, essential for full membership of the social community, and a basic element of the right to freedom of expression and communication. The second approach regards access to telecommunications as an economic good to be consumed in a market like any other good and thus questions of efficiency and the distribution of economic welfare become paramount. Also, from a perspective internal to the telecommunication sector itself, it can be argued that the universal service provision, as long as it has been realized, stems ultimately from the nature of the telecommunications network and the positive consumption externalities, common costs and economies of scale and scope involved (p.25). Based on these approaches, universal service can be defined as a) universal geographical availability, b) non-discriminatory access, and c) reasonable costs or affordability. Here, universal geographical availability means that all citizens, wherever they are located within the boundaries of a country, have a right to equal access to that country’s services. The concept of non-discriminatory access means the equal treatment of all users in terms of price and/or levels of service. This concept relates to that of common-carriage. Thirdly, the notion of reasonable costs or affordability is a more active concept of universal penetration (p.26). These differing possible definitions of universal service must be distinguished because they require different measures of their achievement as policy goals. For example, geographical availability can be measured in terms of differing regional penetration rates and it would tend to be susceptible to the undermining of route averaging and to any move away from universality in connection charges. On the other hand, non-discriminatory access can be measured by the simple presence or absence of universal, non-discriminatory tariffs and will be susceptible to such developments as rebalancing between residential and business subscribers and the introduction of volume discounts. The question of affordability can be measured in terms of both absolute penetration rates and of relative penetration rates in relation to income level. Affordability can also be measured in terms of price and income elasticities in relation to the effect of tariff changes on the real cost of telecommunications. This concept of universal service raises policy questions

Authors: Park, Namkee.
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Tracking Number: ICA-1-11804 Regulatory Governance and Universal Service 7
environments. Keeping in mind this theoretical framework, I will examine the implementation of
universal service in the US and Japan starting with the definition of it.
Definition of Universal Service
According to an OECD report (1991), universal service needs to be distinguished as two different
approaches; one politico-philosophical, and the other economic. Each can lead to a different set
of policy prescriptions and in fact these are often confused in policy debate (p.25).
The first approach conceives universal service, defined as access to telecommunication
services, as a basic right of all citizens, essential for full membership of the social community,
and a basic element of the right to freedom of expression and communication. The second
approach regards access to telecommunications as an economic good to be consumed in a market
like any other good and thus questions of efficiency and the distribution of economic welfare
become paramount. Also, from a perspective internal to the telecommunication sector itself, it
can be argued that the universal service provision, as long as it has been realized, stems ultimately
from the nature of the telecommunications network and the positive consumption externalities,
common costs and economies of scale and scope involved (p.25).
Based on these approaches, universal service can be defined as a) universal geographical
availability, b) non-discriminatory access, and c) reasonable costs or affordability. Here,
universal geographical availability means that all citizens, wherever they are located within the
boundaries of a country, have a right to equal access to that country’s services. The concept of
non-discriminatory access means the equal treatment of all users in terms of price and/or levels of
service. This concept relates to that of common-carriage. Thirdly, the notion of reasonable costs
or affordability is a more active concept of universal penetration (p.26).
These differing possible definitions of universal service must be distinguished because
they require different measures of their achievement as policy goals. For example, geographical
availability can be measured in terms of differing regional penetration rates and it would tend to
be susceptible to the undermining of route averaging and to any move away from universality in
connection charges. On the other hand, non-discriminatory access can be measured by the simple
presence or absence of universal, non-discriminatory tariffs and will be susceptible to such
developments as rebalancing between residential and business subscribers and the introduction of
volume discounts. The question of affordability can be measured in terms of both absolute
penetration rates and of relative penetration rates in relation to income level. Affordability can
also be measured in terms of price and income elasticities in relation to the effect of tariff changes
on the real cost of telecommunications. This concept of universal service raises policy questions


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