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Purpose – The purpose of this paper is to identify concerns developing in regard to current approaches used to define, deliver and fund universal service obligations (USOs) for telecommunications due to developments in competition, new technology, e.g. wireless, convergence and next generation networks (NGN), including voice over internet protocol (VoIP). To stimulate thinking about the policies required to deliver USOs in an IP-enabled NGN environment.

Design/methodology/approach – The paper examines the nature and scope of USOs, including the concept of “functional internet access” to address questions about whether in an NGN environment: present USOs are sustainable; USOs need to change; and whether USOs should include access to broadband? The paper also examines alternative/complementary sources of funding for USOs.

Findings – With falling revenue (due to increasing competition and declining prices) occurring alongside strong demand for funds to deploy NGN, telecommunications operators are less able to provide USOs sustained by cross-subsidisation. Universal service funds, too, may be under pressure. Also there is likely to be an uneven migration to NGN since it is likely that NGN will be deployed first in more profitable, densely populated areas and then only later (if at all) in relatively less commercially viable rural/remote areas. The paper concludes that present USOs can be maintained in an NGN environment. It concludes that since USOs is an evolving concept, there should be regular systematic reviews of whether USOs should be extended to include broadband. The paper concludes that increased funding from general taxation revenue is warranted and would link decisions concerning the nature and scope of USOs more closely with financial responsibility for such decisions.

Originality/value – The paper stimulates rethinking about whether, and if so how, arrangements relating to USOs need to change? In adopting a longer term perspective of universal services, the paper may be a valuable complement to the reviews of USOs being conducted in various countries (since short term decisions should be consistent with longer term developments).