RUTGERS UNIVERSITY STUDY DEBUNKS MYTHS ABOUT TELEPHONE SERVICES

[Dave Farber <farber () central cis upenn edu>]

   RUTGERS UNIVERSITY STUDY DEBUNKS MYTHS ABOUT TELEPHONE SERVICES


NEW BRUNSWICK, N.J. -- A major Rutgers University study released today
concludes that long-distance calling, not basic service rates, drive
people off the phone network; young people, not senior citizens, have
less access to telephones -- especially racial or ethnic minorities;
and telephone usage varies significantly among races and genders, even
though everyone has access to the same services.


The report, entitled "Universal service from the bottom up: A profile
of telecommunications access in Camden, New Jersey," is based on
interviews with Camden residents, but it also reviews and interprets
nationwide statistical data.  In addition, Camden's racial and ethnic
composition and income levels match that of many other low-penetration
areas in the Unites States.  Therefore, lessons learned in Camden
offer insight into nationwide conditions of low telephone penetration.
The universal phone service concept is a national goal to make
telephone service affordable and available to all American households.


Published by Rutgers University professors Dr. Milton Mueller and Dr.
Jorge Reina Schement, the report attempts to answer three basic
questions: Who are the phoneless?  Why are they without phones?  What
policy is needed to connect them to the network?


"Fifteen percent of the households headed by 15-to-24-year-olds are
without telephones; for African-American households in that age group
it is 26%," Schement said.  "The bottom line is this: one of the major
factors affecting the employment of young Hispanics and African-
Americans is the low level of telephones in their households.  You
need a phone to get a job and to improve your economic standing."


Mueller added that among his most interesting findings was that some
people chose not to have telephone service.  "When given a choice,
some people prefer entertainment services like cable TV." He added
that the study shows a principal emphasis of a universal service
policy should be on the cost of usage [i.e. long-distance calling],
not the cost of access [basic monthly service].  "Phones are similar
to credit cards," he said.  "Credit cards have limits.  When credit
cards get maxed out, they can no longer be used and some people have
trouble paying.  The same thing can happen with phone service. "


The study looks at universal service and the myths that have grown up
around telephone penetration and the social condition of being without
a telephone.  The research implications go against the grain of many
common assumptions about universal service because they expose the
following as misconceptions:


0   Myth 1:     Basic monthly service rates control how affordable
                telephone service is. Thus, these rates should be the
                focus of universal service policy.


0   Fact:       Marginal users are driven off the network by usage
                related costs, such as long-distance calling.  In
                addition, the chief economic barrier for low-income
                users is the initial deposit required for new service
                (at least $100.00).


0   Myth 2:     Universal service subsidies should be focused on the
                elderly.


0   Fact:       Ninety-seven percent of Americans 65 years and older
                have telephone service.  This is three percent above
                the national average.  Even when their income is very
                low, more older people have telephones than younger
                people in corresponding age groups.


0   Myth 3:     Maintaining universal service is primarily a problem
                for rural areas.


0   Fact:       There is a greater percentage of people without
                phones in inner cities than in rural areas.  Social
                isolation, once the concern of rural planners, now
                occurs more often in inner cities.


0   Myth 4:     Low income and minority areas are denied access to
                advanced telecommunication services.


0   Fact:       Minority, low-income urban areas such as Camden
                consume a disproportionately high amount of advanced
                telecommunications and premium cable TV services.
                The biggest risk is not that  poor Americans will be
                denied access to these services, but that they will
                buy services they cannot afford.


0   Myth 5:     Telephone service is more valuable than cable
                television because being able to communicate is more
                important than being entertained.


0   Fact:       Many inner-city households in Camden prefer cable TV
                service to telephone service.  Their reasons are not
                irrational: a) telephones often expose them to
                charges they perceive as uncontrollable; b) telephones
                can be a channel for undesirable interaction involving
                drugs and crime; and c) government agencies and
                businesses, which these household view as threatening,
                may call them for matters like bill collection.


                These households believe, a) cable TV offers
                inexpensive entertainment; b) the many hours and large
                variety of entertainment provides more satisfaction to
                more members of the household than telephone
                conversations; c) cable may keep children at home and
                away from dangerous streets; and d) cable offers a
                visible sign of well-being in households with few
                material comforts.


0   Myth 6:     There is no difference in telephone usage between
                races or genders.


0   Fact:       The percentage of people with telephones varies
                significantly between whites, blacks and Hispanics,
                even when household income is held constant.
                Households headed by women have lower penetration
                levels than do households headed by men.


"We found that telephone service does make a difference in people's
lives," Schement said.  "People go on and come off the network all the
time.  Society benefits by keeping them on.  But to do so will require
a true understanding of why they are off, and the cooperation of
telephone companies, regulators and independent researchers."


The study was funded by Bell Atlantic, and is based on in depth
interviews with families who do not have telephone service now, or
have lost service in the recent past.  The interviews were conducted
in Camden, N.J. as part of the ongoing research of the Rutgers
University Project on Information Policy. The report concludes that,
with a telephone penetration level of 80.6%, Camden falls
significantly below the national average of 94%.