Tuesday, April 21, 2009

The Kingsbury Committment and Telecommunications: Affordable Service to All

What was the Kingsbury Commitment?
It was a 1913 compromise between Congress and AT&T in which AT&T agreed to:
  • sell off its $30 million in Western Union Stock,
  • not aquire any other independent companies,
  • allow independents access to its long-distance lines, and
  • provide quality service to all
It was enacted formally into law by Congress in the Graham Act of 1921.

Without this compromise, many scholars believe that the Bell System might have been broken up, or even nationalized.

Historical Impact

Government Regulated Monopolies
The Kingsbury Commitment was viewed by some as a government vote for monopolies becasue it did not restrict AT&T from acquiring new telephone systems, only that an equal number be sold for each new system purchased. This was considered a built-in incentive for monopoly-swapping rather than continued competition.

Introduction of Universal Service
Originally, the term Univseral Service meant the interconnection of the systems (Bell and independents) into a unified, non-fragmented service. This would allow all subscribers in a given geographic area to call all other subscribers with a single subscription.

As the telephone system grew, however, the idea of Universal Service changed to mean a social policy of universal telephone entitlement. The Communications Act of 1934 crystallized this telecommunications policy. It's goal was "the provision of universal service to every citizen in the country." Telephones began to be viewed as a social necessity that should be provided to all.

Present Day Impact

Although the Bell System was broken up in 1984, monopolies still remain, although more in the form of local monopolies than national monopolies. The local competition provisions of the Telecommunications Act of 1996 addressed the question: What are the appropriate interconnection and unbundling rules for promoting efficient competition and maintaining universal telephone service? Legislatures are still trying to figure out how to balance providing universal service to all and the problem of monopolies.

Universal Service
Today, universal service means that regulators should implement public policies which provide all households, no matter how remote or poor, with access to an affordable set of basic telecommunication services.
This remains a very controversial issue. Some people view basic telecommunication services as more than just a telephone in every home; it implies that a universal communications infrastructure contributes to national unity and equality of opportunity - it's an expression of liberal egalitarianism, like universal schooling, literacy, or voting rights. However, many question the fairness of providing universal service to everyone.

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