Telephone Communications:

Bell Operating Company Entry Into New Lines of Business

RCED-86-138: Published: Apr 16, 1986. Publicly Released: Apr 16, 1986.

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In response to a congressional request, GAO examined the rationale allowing the regulated Bell Operating Companies (BOC) to enter various lines of business from which they are currently restricted by the 1982 consent decree that required the American Telephone and Telegraph Company (AT&T) divestiture.

GAO found that BOC have sought waivers from the restrictions to engage in new unregulated lines of business, both related and unrelated to their basic telephone services, since the consent decree was issued. The judge who presided at the antitrust trial has approved BOC requests to enter new lines of business not related to basic telephone service but has indicated that requests to enter the specifically restricted lines of business would not be approved. GAO also found that the Federal Communications Commission and Department of Commerce's National Telecommunications and Information Administration are among those supporting the BOC expansion into telecommunications markets prohibited by the consent decree. In addition, GAO found that: (1) proponents generally argue that telecommunications technology and the marketplace rapidly change, and BOC are a multibillion-dollar national resource that should be used, with appropriate regulatory safeguards, to advance the nation's telecommunications technology and competitiveness; and (2) opponents generally argue that the federal government's antitrust concerns, which led to the AT&T divestiture, would be recreated at the BOC level if BOC are allowed to provide unregulated telecommunications services while they still maintain monopoly services to local telephone subscribers.

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