Convergence challenges the traditional USO in two ways: first, funding of universal services is usually obtained through extra charges imposed on certain telecom services e.g. access charges or interconnection charges. These charges are only demanded from use of telecom networks. USO funding may therefore create a market failure favoring transmission in alternative networks. Second, it becomes questionable to fund one particular service (POTS) when it is produced in conjunction with a host of other services. Regulators must therefore consider a reformulation of the definition of the content of the USO and find new ways of funding which are technology neutral.
An important question with regard to convergence, is whether broadband should be included in the definition of universal services. The following considerations are relevant for considering inclusion of a specific service in the universal service obligation:
- Is the service available and subscribe to by a majority of the population?
- Is the service essential for education, public health or safety or does non use lead to social exclusion?
- Does widespread use contribute to the benefit of current subscribers (network effect)?
These or similar parameters are applied for review of USO in US and the EU.
Even if broadband is deemed to be eligible for being a part of USO, it must be considered whether an obligation will be the best way to stimulate penetration. If not properly designed a universal service obligation may distort the market and delay network investments. A more light handed approach is therefore to be preferred.