Universal Service - Origins of Concept and Term

Origins of Concept and Term

The concept of universal service appears to have originated with Rowland Hill and the Uniform Penny Post which he introduced in the United Kingdom in 1837. Though Hill never used the term "universal service", his postal system had the hallmarks of early universal service; postal rates were reduced to uniform rates throughout the nation which were affordable to most Britons, enabled by the postage stamp (first introduced here) and a General Post Office monopoly on mail. Hill's reforms were quickly adopted by postal authorities worldwide, including the United States Post Office Department (now the United States Postal Service) which already held a monopoly through the Private Express Statutes. The service obligations of USPS under current law are commonly referred to as the "universal service obligation" or "USO". Universal service is also a key objective of the Universal Postal Union.

The term "universal service", on the other hand, appears to have originated with Theodore Newton Vail, president of American Telephone & Telegraph (the original AT&T) and head of the Bell System, in 1907 with the corporate slogan "One Policy, One System, Universal Service". It was intended as a contrast to the "dual service" that had become common since the original Bell telephone patents expired in 1894, where independent telephone companies operated not only in non-Bell System markets, but also as a competitor in Bell markets.

These independent phone companies did not interconnect to the Bell System; though modern commentators suggest Bell refused to do so as an excuse for monopolization, it was argued then that phone systems of that day could not interconnect unless all phone companies used the same technology, as the Bell System did. This required many businesses to maintain phones with both companies, or else risk losing customers who subscribed to the other phone company.

Vail argued that an interconnected phone system (the Bell System), operated by one company (AT&T) and with rates regulated by the government, would be superior to the dual system and would produce great social benefits, much like Hill's postal reforms. Though largely ignored by modern commentators, Vail did work for the U.S. Post Office Department earlier in his career; thus, he may have been inspired by the U.S. postal system of that day.

Eventually, Vail prevailed in his views, first through state laws and ultimately through the Kingsbury Commitment of 1913, where AT&T agreed to several measures, including interconnection with non-competing independent phone companies, to avoid antitrust action, thus formalizing the Bell System monopoly. Meanwhile, the Mann-Elkins Act of 1910 made AT&T subject to regulation by the Interstate Commerce Commission.

Universal service in telecommunications was eventually established as U.S. national policy by the Communications Act of 1934, whose preamble declared its purpose as “to make available, so far as possible, to all the people of the United States, a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges”. The chief purpose of this law was to combine the Federal Radio Commission with the ICC's wire communications powers, including regulation of AT&T, into a new Federal Communications Commission with greater powers over both radio and wire communications.

Though the Bell System divestiture of 1984 dissolved the monopoly that inspired the term (though SBC Communications, one of the Baby Bells created then, ultimately bought AT&T and assumed its name), universal service remained official U.S. telecommunications policy under the 1934 Act, even as the FCC began to abandon rate regulation. It was further codified by the Telecommunications Act of 1996, even as it permitted expanded competition in the telecommunications field. The Federal Communications Commission is actively exploring universal service reform, and the place of universal service to the broadband communications environment.