Universal service

An example of this concept is found in the US Telecommunications Act of 1996, whose goals are: Universal service was widely adopted in legislation in Europe beginning in the 1980s and 1990s.

[2] 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.

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.

[citation needed] By 1913, AT&T had favored status from U.S. government, allowing it to operate in a noncompetitive economic environment in exchange for subjection to price and quality service regulation.

[8] The Willis Graham Act of 1921 was called into action in order to resolve pressing issues in the debate about the merits of interconnectivity of telecommunication.

Before the Graham act was passed the commonly expressed opinion was, such as by the Senate Commerce Committee, that telephone service fit the definition of a natural monopoly.

The central practical problem, according to the committee, with the Willis Graham Act was competing telecommunication services serving one individual market.

Universal service in telecommunications was eventually established as U.S. national policy by the preamble of 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, Nationwide, and world-wide wire and radio communication service with adequate facilities at reasonable charges”.

[13] The 1975 report to congress by Eugene V. Rostow on behalf of AT&T was influential in offering a reinterpretation of the 1934 communications Act as defending the benefits of monopoly: not duplicating infrastructure and providing service to all.

[14][15] The Bell System divestiture of 1984 dissolved the monopoly that inspired "Universal Service" and the FCC began to abandon rate regulation.

The risk of such an approach, while allowing competitive entry, is that a cross-subsidy exists and thus new entrants can potentially cream-skim (enter in only profitable routes or lines).