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Universal service in telephone history : A reconstruction


  • Mueller, Milton


The universality of telephone service is generally believed to be an achievement of regulated monopoly and rate subsidies. This paper critically examines the historical claims of what it terms the ideology of universal service. It shows that a ubiquitous telephone infrastructure developed in the USA because of competition between Bell and the independents in the period 1894-1921. Moreover, it shows that it was the refusal of Bell and the independents to interconnect with each other, a phenomenon which is generally ignored or condemned in the historical and economic literature, which propelled both systems into a race to achieve universality, leading to rapid increases in penetration and geographic scope, particularly in rural areas. The phrase universal service, which first emerged in telephone policy debates in 1907, did not mean a telephone in every home or rate subsidies, but the interconnection of the systems into a unified, non-fragmented service.

Suggested Citation

  • Mueller, Milton, 1993. "Universal service in telephone history : A reconstruction," Telecommunications Policy, Elsevier, vol. 17(5), pages 352-369, July.
  • Handle: RePEc:eee:telpol:v:17:y:1993:i:5:p:352-369

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    References listed on IDEAS

    1. Greenstein, Shane M & Spiller, Pablo T, 1995. "Modern Telecommunications Infrastructure and Economic Activity: An Empirical Investigation," Industrial and Corporate Change, Oxford University Press, vol. 4(4), pages 647-665.
    2. Cave, Martin & Donnelly, Mark P., 1996. "The pricing of international telecommunications services by monopoly operators," Information Economics and Policy, Elsevier, vol. 8(2), pages 107-123, June.
    3. Cronin, Francis J. & Parker, Edwin B. & Colleran, Elisabeth K. & Gold, Mark A., 1991. "Telecommunications infrastructure and economic growth : An analysis of causality," Telecommunications Policy, Elsevier, vol. 15(6), pages 529-535, December.
    4. Oulton,Nicholas & O'Mahony,Mary, 1994. "Productivity and Growth," Cambridge Books, Cambridge University Press, number 9780521453455, March.
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    Cited by:

    1. Camp, Jean & Tsang, Rose, 2001. "Universal Service in a Ubiquitous Digital Network," Working Paper Series rwp01-006, Harvard University, John F. Kennedy School of Government.
    2. Jayakar, Krishna & Liu, Chun, 2014. "Universal service in China and India: Legitimating the state?," Telecommunications Policy, Elsevier, vol. 38(2), pages 186-199.
    3. Chiang, Eric P. & Hauge, Janice A., 2013. "The impact of non-neutral federal regulatory policy on competition," Telecommunications Policy, Elsevier, vol. 37(11), pages 1142-1149.
    4. Nucciarelli, Alberto & Sadowski, Bert M. & Ruhle, Ernst-Olav, 2012. "Should next generation access networks fall within the scope of universal service? A EU 27 perspective," 23rd European Regional ITS Conference, Vienna 2012 60393, International Telecommunications Society (ITS).
    5. Eric Chiang & Janice Hauge & Mark Jamison, 2007. "Subsidies and distorted markets: Do telecom subsidies affect competition?," Working Papers 07002, Department of Economics, College of Business, Florida Atlantic University.
    6. Barros, Pedro P. & Seabra, M. Carmo, 1999. "Universal service: does competition help or hurt?," Information Economics and Policy, Elsevier, vol. 11(1), pages 45-60, March.
    7. Mark A. Jamison, 2011. "Liberalization and Regulation of Telecoms, Electricity, and Gas in the United States," Chapters,in: International Handbook of Network Industries, chapter 21 Edward Elgar Publishing.
    8. Unruh, Gregory C., 2000. "Understanding carbon lock-in," Energy Policy, Elsevier, vol. 28(12), pages 817-830, October.
    9. Eric P. Chiang & Janice A. Hauge, 2007. "Funding Universal Service: The Effect of Telecommunications Subsidy Programs on Competition and Retail Prices," Working Papers 07-08, NET Institute, revised Aug 2007.
    10. Holt, Lynne & Galligan, Mary, 2013. "Mapping the field: Retrospective of the federal universal service programs," Telecommunications Policy, Elsevier, vol. 37(9), pages 773-793.

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