Internet Telephony : Effects on the Universal Service Program in the United States

Internet phone services have grown from technical novelty to a competitive threat for traditional circuit-switched telecommunications. Using available telecommunication deployment statistics in the United States and modeling software, this paper presents two scenarios that investigate the potential impact of Internet telephony on universal service programs. They test whether the introduction of this technology and the way it could potentially be regulated would sufficiently reduce contributing carriers’ revenues to threaten the viability of the Universal Service Program. We conclude that the regulatory policies developed in the past century to support universal service have been obsolesced by the innovation and creative destruction of Internet telephony