Universal Service in Tennessee: a Pre-competition, Pre-lifeline Assessment

A multiple regression model is used to assess the determinants of penetration rates in local exchange telephone service areas in Tennessee. The penetration rate is the percentage of households with telephone subscriptions in a given area. Since this study uses 1990 data, it is called a pre-competition, preLifeline assessment. In 1992, Tennessee was certified for participation in the Lifeline, a program to provide assistance for local telephone service to low income households. The Telecommunications Act of 1996 allowed local telephone service competition. The study finds that education level, lack of home ownership, rural residency, poverty among certain age groups, and service connection fees have a significant relationship with the penetration rate.