Tapping User-Driven Innovation: A New Rationale for Universal Service

The current transformation of communication policies, as governments turn to the marketplace as the driver of network evolution, requires a redefinition of universal service. The debate so far has focused primarily on the elaboration of new funding mechanisms and the definition of which services should be covered. We argue that a more fundamental, third area demands attention: the articulation of a new rationale for universal service itself. Without articulating a clear justification for universal service, designing its scope and funding mechanisms is problematic at best. Past justifications rested on welfare (make telephony affordable to all) and network externalities (increase the network?s value by widening its reach). Increasingly, these need to be complemented by a new rationale based on the innovative potential of universal service. This article explores how universal service can fuel innovation-driven economic growth.