Internet Fragmentation > Reforming Contributions to Universal Service

Universal Service Needs to Be Fair For Everyone

Region: Global
Threat type: Regulating Business Relationships
Last updated: 1 December 2023

Universal Service funds help us reach the most under-served. But this cannot come at the cost of the open, global Internet.

Universal Service are regulatory obligations that have the objective of maximizing the availability of telecommunication and Internet access. They consist of monetary contributions from telecom operators, to allow for improving accessibility in underserved areas. They exist all over the world, and their implementation varies across regions, but in most countries they’re funded by a percentage of revenues from telecom operators.

In the United States, the Universal Service Fund (USF) was first introduced in 1934 for wire and radio communication, and then updated as part of the 1996 Telecommunications Business Act. It has been updated several times, with an aim to increase connectivity in rural or low-income areas. In the United States, the USF has been funded by long-distance and international calls, which were a significant source of revenue in the 1990s. In recent times,these have been declining rapidly since the introduction of voice over IP (VoIP) services.

As a result, there are discussions in the United States about how this should be reformed, so that the USF can be adequately funded for its purpose. Some telecom providers have raised questions around the disproportionate use of infrastructural services by large Internet platforms, especially those who offer messaging services.

In the European Union, these schemes are called Universal Service Obligations and the funds come from a percentage of annual revenues from telecom operators. However, telecom operators have introduced the discussion about the disproportionate traffic used by large Internet platforms. This demand by telecom providers to charge for traffic has arisen as part of the ‘fair-share’ discussions that have taken place in 2023.

It’s not clear yet how the reform should happen, but as we’ve seen in South Korea and in proposals elsewhere, adding fees based on traffic could fragment the Internet.

Status

Traditionally, Universal Service has been funded by telecom operators, who would contribute to or would be charged a percentage of their profits. With the nature of communication changing rapidly, and long-distance calls and text messaging being increasingly replaced by VoIP and Internet-based messaging services, telecom operators have been attempting to revive policy proposals that would compel Internet-based messaging services and large Internet platforms to pay telecom operators and ISPs a fee for using telecom infrastructure. Known as the ‘fair-share’ discussion in the EU and the ‘sender-pays’ argument in South Korea, this method of gaining contributions to Universal Service will leave the Internet fragmented and fundamentally change the ecosystem.

If it makes the Internet more expensive for the average user, then this is not a solution that benefits the people who need the Internet most.

Our Position

As with any change to the status of the Internet ecosystem, it is important to assess the impact of such proposals. The Internet Society is developing an Internet Impact Brief to look at the potential impact of some of these different proposals. Our aim is to ensure that these infrastructural deployments can be funded without fragmenting the Internet.

Green background with patterns

Talking Points

  • Everyone should have access to the Internet and all the benefits it brings to societies, communities, and individuals. But ‘fair-share’ contributions are not the way to build Universal Service.
  • It is important that Universal Service schemes are implemented in a way that does not align with ‘fair-share’ schemes. If a contribution is based on traffic, it undermines network neutrality.
  • We should not use existing concerns around the dominance of large Internet platforms in our daily activities to assume that charging them for traffic would hold them accountable. Such a move will primarily benefit the biggest telecoms operators.
  • Universal Service schemes should make the Internet cheaper and easier to access for those who need it most. An incorrect implementation strategy could end up making the Internet costlier for everyone.

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