Worldwide Trends in Universal Service Funds and Telemedicine

Abstract

A survey of recent worldwide trends in Universal Service Funds (USFs) and the assistance provided for their application indicates that industrialized countries and developing nations alike have offered or plan to offer tax-relief measures or reimbursement for communications costs incurred by telemedicine programs, thus finding a way to actively apply USFs in rural areas. There are three main systems used to calculate the amount of reimbursement from a USF. While many countries adopt a service-area net-loss estimation method, Japan uses a benchmark method and provides financial assistance only to unprofitable areas. The USA has proactively introduced telemedicine to rural areas and isolated islands in order to minimize rapidly rising healthcare costs and to improve the efficiency of healthcare services. In the USA, the USF is used to pay back communications costs incurred through telemedicine programs. For instance, the budget allocated from the USF for reimbursements for telemedicine in Alaska reached USD 30 Mil. in 2007. Developing countries in Africa and Asia are operating various forms of telemedicine on a trial basis, but a tax-relief measure or payback of communications costs, which are a large portion of the running costs, will need to be implemented to ensure sustainable and autonomous operation of telemedicine. In Japan, up until January 2007, the USF system assumed the use of an NTS (non-traffic sensitive cost) system to obtain funds from connection fees, and this system would receive funds from each telecommunications carrier (payer: the telecommunications carriers). The beneficiaries would be limited to two companies, namely NTT East and NTT West. However, the Japanese USF system was revised in February 2007, and a fee is now collected from each telephone number (payer: the user). The collected funds are used to cover losses in unprofitable areas (not limited to remote areas) among 7,000 business areas in Japan. In view of worldwide trends, the author believes that Japan should also start using the USF system to reimburse communications costs (including costs of telemedicine) in order to achieve sustainable and autonomous operation of public communication systems in rural areas.