FINANCING UNIVERSAL ACCESS IN THE TELEPHONE NETWORK

This paper examines the issue of financing the social goal of universal access to the telephone network. There are many feasible methods of financing the subsidies involved. We show that alternative financing schemes differ in terms of their economic efficiency, equity, political attractiveness, and administrative feasibility. As a consequence, tradeoffs among these characteristics must be made in choosing a financial mechanism to achieve a given social goal; financing schemes appropriate in some circumstances may be inappropriate in others.