Feasibility Study Of Telecommunications Universal Service Fund In China

The concept of universal service was firstly put forward by Theodore Vail, the CEO of AT&T, in 1907. He claimed that "one policy, one system and universal service". Both the ways of cross-subsidization and universal service fund are tryed for achieving telecommunication freedom of citizen and maximizing social welfare.Universal service's measure in China is distributive-contract, it has made remarkable achievement. The way of cost compensation is cross-subsidization. But the base of cross-subsdization is destroyed because of the transformation of telecommunication market in China, so the validity of universal service gets baptism. Regulators have to make the choice of whether using universal service fund or not, they need to make the study of feasibility. The innovation of this article is calculating converseon-cost and delay-cost and other variables, especially commenting the ignorance of different cross-subsidization's base and universal service's deposit-cost. The author also compares two different social welfare levels and makes economic analysis to supply the feasibility study to regulation organization.This article uses some method and models origining from Jean-Jacques Laffont to prove the feasibility of universal service fund. In fact the universal service fund is better than the distributive-contract, and we suggest expediting the conversion from cross-subsdization to universal service fund to minimize the delay-cost.