Pursuant to a legislative requirement, GAO reviewed the Federal Communications Commission's (FCC) new rule on Multipoint Distribution Service (MDS) and Instructional Television Fixed Service (ITFS) two-way transmissions. GAO noted that: (1) the rule would permit multichannel MDS and ITFS licensees to make more flexible use of their 6 megahertz (MHz) channels through the use of digital technology; (2) MDS is primarily used for wireless cable service to subscribers, while ITFS is primarily used for one-way video service to students; (3) under the revised rule, licensees would be able to utilize all or any part of their 6 MHz channels for two-way service; they will have the ability to use response station hubs as collection points for transmissions from a subscriber for which the operators will be issued blanket licenses instead of separate licenses for each hub; redefines signal booster stations to allow such stations to originate transmissions as well as to relay them from other stations; and permits booster stations to cellularize wireless cable operations in areas too large to be served by a single station; (4) the rule would also permit ITFS licensees to lease excess channel capacity to MDS operators; and (5) FCC complied with applicable requirements in promulgating the rule.