You Have to Have a Telephone! Universal Service Update
The Digital Beat --
vol. 2, no. 25 2/29/2000
Universal Service Update
Introduction
The Latest Numbers
Explaining Technology Diffusion
Digital Divide Implications
I. Introduction
With all the attention on the digital divide of late, we may be long sight
of the 6.3+ million American households that are still not connected to
the most basic of telecommunications services: plain old telephone. Despite
claims that basic telephone service is already universal, millions of
Americans still are not connected to a network envisioned to reach from
every home to every other home. And looking at the diffusion of this technology
may offer insight to how Internet access may be adopted by American households.
II. The Latest Numbers
In January, the Federal Communications Commission released new statistics
on telephone subscribership. Collected by the Bureau of the Census, the
FCC tabulates the number and percentage of households that have telephone service. The January release uses numbers from November 1999 and reports
that 94.1% of American households subscribe to telephone service. Although
when aggregated the numbers seem to indicate that the FCC and state regulators
have been successful in adopting policies that help customers acquire
and maintain telephone service, focusing on particular communities reveals
some gaps.
Included in the FCC report is a statistical breakdown of subscribership
by state. Although subscribership levels reach over 97% in seven states,
17 states have subscription levels under 93%. The table below compares
the worst and best states for telephone subscribership.
| Bottom 15 | Top 15 | ||
| ARKANSAS | 87.2 | PENNSYLVANIA | 97.5 |
| MISSISSIPPI | 87.8 | MAINE | 97.3 |
| NEW MEXICO | 88.6 | MINNESOTA | 97.3 |
| ALABAMA | 89.9 | NEW HAMPSHIRE | 97.3 |
| NEVADA | 91.1 | NORTH DAKOTA | 97.2 |
| TEXAS | 91.4 | COLORADO | 97.1 |
| KENTUCKY | 91.5 | CONNECTICUT | 97 |
| OKLAHOMA | 91.5 | UTAH | 96.6 |
| FLORIDA | 92.0 | MASSACHUSETTS | 96.1 |
| DC | 92.1 | VERMONT | 96.1 |
| LOUISIANA | 92.1 | CALIFORNIA | 95.9 |
| KANSAS | 92.2 | HAWAII | 95.9 |
| SOUTH DAKOTA | 92.1 | NEBRASKA | 95.8 |
| ILLINOIS | 92.4 | WISCONSIN | 95.4 |
| WEST VIRGINIA | 92.4 | NEW YORK | 95.3 |
Not surprisingly,
subscription levels also vary by income level. As a
general rule, the greater the household income, the greater chance that
the household has telephone service. Twenty-five percent of households
with annual income below $5,000 do not have telephone service. Subscribership
levels rise sharply with incremental income gains, but telephone penetration
does not top 90% until the $12,500-$14,999 income level; it does not reach
the national average of 94% until $20,000-$24,999/yr. For households with
incomes over $30,000/yr, subscribership falls between 97-99%.
The FCC's report Telephone Penetration by Income by State gives a cross-tab
by income by state. The latest report, from about a year ago, provides
data for March 1998 and before. The FCC is currently working on an update
for March 1999 data which should be out in the next few weeks and will
be available on the FCC-State Link Web site (www.fcc.gov/ccb/stats).
Differences between states, explains the FCC Common Carrier Bureau's Alexander
Belinfante, are partly explainable by different income levels, partly
by different rate levels, partly by different regulatory regimes (such
as Lifeline programs and disconnect policies), and partly by a myriad
of other factors (economic, demographic, etc.).
More striking, however, are gaps in service between White, Black and
Hispanic households at the same income levels. At the lowest income levels,
under $5,000, subscribership levels vary greatly: for Whites, it is 79%
compared to 72.7% for Hispanics and 66.8% for Black households. White
households pass the 90% threshold at income levels around $12,500/yr and
pass the national subscribership average by $20,000/yr. By contrast, Black
and Hispanic households don't reach the 90% level until household income
reaches $20,000/yr and don't reach the national telephone penetration
level until $25,000/yr (Hispanics) or $35,000/yr (Blacks). Overall, 95%
of White households have telephone service while just 89.7% of Hispanic
households and 87.7% of Black households do. Why the disparities?
III. Explaining Technology Diffusion
Dr Jorge Reina Schement, Professor of Communications and Information Policy
and Co-Director of the Institute for Information Policy in the College
of Communications at Penn State University, has been researching and writing
on information and communications technology diffusion for many years.
In a recent article, "Of Gaps by Which Democracy We Measure, Dr Schement
looks at America's tradition of guaranteeing access to communications
technologies for _all_ to ensure the potential for citizens to participate
in economic, political and social activities. Communication, especially
in today's society, creates society.
Telephone penetration has lagged for a number of groups -- minorities,
women with children, Native Americans, renters, the unemployed -- and
income alone does not explain why as noted above. Since the 70's, persistent
gaps in telephone service for these groups have been documented and the
gaps have survived a number of policy remedies.
Dr Schement has identified differences in diffusion between information
goods and information services. Information goods, like radio, television
and VCRs, diffuse very rapidly and whatever gaps exist are closed quickly.
Information services, especially those that require the deployment of
infrastructure, diffuse much more slowly. Consider these examples:
- * In 1925, less than 25% of all households owned radios; by 1930 penetration reached 46%. By 1940, penetration reached 82% and radio reached saturation by 1950.
- * In 1950, less that 10% of households owned a television. By 1965, less than 10% of homes were _without_ a television. In 1956, 90% of the top income quartile owned a TV while only 55% of the bottom income quartile did. Ten years later, no gap existed.\
- * For VCRs, penetration was 2% in 1980, but 70% by 1990 and 90% by the end of the decade.
- * By contrast, between 1878 and 1958, telephone penetration went from 0 to 75% with dips along the way during the depression. Penetration did not flatten until 1970 at 93% where it has remained for the last 30 years.
The reasoning behind these penetration rates are not hard to discern. Information goods require just a one time purchase for which the household can save. On the other hand, information services require the household to make monthly payments. It took 60 years to reach saturation for electric service, 100 years for telephone service and it has been 55 years and counting for cable TV service to reach saturation.
IV. Digital Divide
Implications
The latest technology gap raising concerns is called the digital divide.
Who has Internet access, who doesn't? Since the mid-90s, soaring Internet
penetration has garnered headlines. But that has also been during a prolonged
expansion of the US economy. But couldn't a downturn in the economy mean
a dip in Internet subscribership -- just as telephone subscribership dipped
during the Depression? And, in any case, poorer households will have a
harder time maintaining service, just as they have had the most problems
maintaining phone and cable service. Given the importance of the Internet
to the promise of participation, Dr Schement concludes, policy makers
should concern themselves with the diffusion of Internet service and seek
policies to support it. Paula Bagasao, president of Global Knowledge Services,
writes that the US is in a unique position to work on universal service:
our economy is robust, people are working, the technology is there and
prices are low.
In speeches earlier this month, National Telecommunications and Information
Administration Director Gregory Rohde reiterated the Administration's
commitment to "an evolving level" of universal service as outlined
in the Telecommunications Act of 1996. Dir Rohde said that universal service
must move from "POTS" (plain old telephone service) to "PANS" (Provisioning of Advanced Services):
There are 6 principles of reform specified in...the Telecom Act.
Three of those principles mention the word "access." In each
case,
access is linked to "advanced telecommunications and information
services." The Act does not suggest that universal service be limited to yesterday's technology and service. Rather, the Act consciously links universal service support with an "evolving level" of service. In other words, it must be forward looking -- not retro.
Dir Rohde then spoke about the TOP grant program and the Administration's
commitment to closing the digital divide. The focus, Rohde said, will
be on partnerships with the private sector.
With broadband services being rolled out throughout the country, the
Administration does well to guarantee access to comparable access to comparable
services at comparable rates. But will 30 years of stagnant telephone
penetration levels what has happened to the commitment to ensuring affordable
telephone service to all? In a world where the value communications technology
are always rising, where "anytime anywhere" communications are
common, what of the millions of households with telephone service -- what
of the people who are not even counted because they do not have homes?
Certainly, a "retro" approach to universal service is not needed,
but
innovative solutions to long-standing problems _are_ before today's issues
can be fully understood and addressed. At a Washington Legal Foundation
discussion on universal service this month, Consumer Federation of America
Research Director Mark Cooper said, "there are economic values in
creating a ubiquitous, readily available [telephone] network."
Earlier this month, Sen. John Rockefeller (D-WV) led 18 senators in urging
FCC Chairman William Kennard to reform universal service policy. The senators
asked the FCC to:
- Ensure that universal service support is portable.
- Support should be tied to consumers, not to companies.
- Competitors who win customers away from incumbents should receive the same support that the incumbent would have received if they had retained the customer.
As regulatory reforms are developed at the FCC over the coming months,
policymakers need to keep their eye on a core goal of the Telecommunications
Act of 1996:
Consumers in all regions of the Nation, including low-
income consumers and those in rural, insular, and high
cost areas, should have access to telecommunications
and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas.
(c) Benton Foundation 2000.
(www.benton.org/cpphome.html).
A
DIGITALLY DIVIDED LIFE
Source - San Jose Mercury, AUTHOR: Mike Cassidy]
The iMac computer Myra Jodie won from a teen Web site will be the first
on her block. While the machine is Internet-ready, Myra's home is not.
The 13-year-old lives on a Navajo Indian reservation where only a quarter
of the home's have a telephone. Myra's home does not have one - nor does
it have running water - nor is it likely that she will have one soon.
The local phone company says it charges from $6,600 to $10,000 a mile
to extend new service. Her mother estimates they live four miles from
the nearest telephone line. To make a phone call, she goes to one of the
four pay phones at a local food store eight miles away. The store takes
messages for her when friends call for her there. It is a pain not having
a phone, but it's the way it's always been. The phone company says many
Navajos are too poor.
Others worried about the lack of phones say the phone company charges
too much. Myra's mother says she's looking into getting a phone. Her first
step is to put down a $200 deposit. But Marcella Jodie, 36, is unwilling
to concede defeat. Myra had been asking for a computer for three years. "I'm so proud of my little girl," she says. "I can't afford
to get one for her and she did it herself."
TRIBES
SEEKING PHONE SYSTEMS AS STEP TO WEB 10/2/00 [SOURCE: New York Times
(A1), AUTHOR: Simon Romero]
http://www.nytimes.com/2000/10/02/Technology/02TRIB.html
Mescalero Apache Telecom Inc is the latest effort by the Mescalero Apache
Indian tribe to promote economic development on its reservation. Godfrey
Enjady, the new company's general manager, intends to expand basic telephone
service beyond the 40 percent of the tribe's households with phones, ring
the reservation with a fiber-optic network and introduce high-speed Internet
connections. And the Mescalero Apaches are not the only Indian Nation
to form a tribally-owned and operated telecommunications company. There
are a half-dozen American Indian-owned telephone companies in operation
on Indian lands. And their numbers are expected to grow after the Federal
Communications Commission's recent decision to add as much as $35 million
to the $550 million in federal money already available to companies that
expand access to basic phone service on Indian reservations. Only 47 percent
of the nation's 720,000 Indian households have basic telephone service,
compared with a nationwide rate of 94 percent, according to the F.C.C. "The Indian people are at the top of the list of groups that are most
at risk of being left out of the emerging dot-com economy," said William
E. Kennard, the chairman of the F.C.C. "When a tribal government establishes
its own telephone company, it is creating an economic development nucleus."
--
John Shoch March 25, 2007 2:39:08 PM EDT
cellphones on planes / AT&T history
NYT article from 22 years ago:
There was a famous "device which does for the mouth what earphones do for the ears."
Many people know of the famous Carterfone case, which was about an electrical device which connected to the phone -- AT&T tried to ban the device, but eventually lost, helping to open up the market for third-party phones. But in 1956 (over 50 years ago, and 12 years before Carterfone) there was the Hush-A-Phone case: sort of a small cone or mouthpiece attached to a phone to collect and contain a speaker's voice.
Pictures
It's an amusing story: the Hush-A-Phone started in the 1920's as an attachment for a "candle-stick" style phone, and was sold for decades; a later version was an attachment to handsets. As recounted here, apparently an AT&T lawyer on his lunch-break saw one in a shop window, and decided to sue to stop this unauthorized attachment to a phone. The FCC supported AT&T, but on appeal the case was overturned, and the FCC was ordered to allow these "foreign attachments." Thus, an over-eager AT&T lawyer precipitated what many view as the first small crack in the AT&T monopoly.The short decision can be found An excerpt from the ruling: "To say that a telephone subscriber may produce the result in question [**7] by cupping his hand and speaking into it, but may not do so by using a device which leaves his hand free to write or do whatever else he wishes, is neither just nor reasonable. The intervenors' tariffs, under the Commission's decision, are in unwarranted interference with the telephone subscriber's right reasonably to use his telephone in ways which are privately beneficial without being publicly detrimental."
John Shoch
Alloy Ventures
PS: Another alternative is this Portable Phone Booth