Survey of Small Businesses' Reactions to Changes in the Costs of Telephone Service

RCED-85-106: Published: May 22, 1985. Publicly Released: May 24, 1985.

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Pursuant to a congressional request, GAO surveyed small businesses on their reactions to changes in the cost of their telephone service. The survey was undertaken to assist the House Committee on Small Business: Telephone Task Force's efforts to obtain information on how recent judicial and regulatory decisions dealing with the telephone industry were affecting small businesses.

GAO reviewed the basic methodology used by Bell Communications Research, Inc. in its 1984 report on the impact of rate changes on small business and found that the populations from which the sample was drawn did not include many small businesses and, therefore, was not representative of all small businesses. GAO noted limitations in the comprehensiveness of the population sampled and found a need for information on sample variances so that the reliability of the data presented could be evaluated. GAO found that: (1) one-fourth of the small businesses represented in the survey reported that monthly telephone bills had increased by more than 25 percent; (2) constant or increased monthly charges were also reported for individual components of bills, including local and long-distance services and equipment leasing; (3) small businesses' combined intrastate and interstate long-distance costs had increased; and (4) about 72 percent of the businesses with more than one telephone line were not aware of the Federal Communications Commission's end-user access charge decision that increased local service telephone costs for multi-line businesses.

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