Telephone Communications:

Bypass of the Local Telephone Companies

RCED-86-66: Published: Aug 18, 1986. Publicly Released: Aug 18, 1986.

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GAO detailed the results of its review on customers' bypass of local telephone companies, specifically: (1) the extent of and reasons for bypass; (2) the impact that bypass may have on local telephone company revenues; and (3) observations on some regulatory actions and proposals that address bypass.

GAO found that: (1) between 16 and 29 percent of large-volume telephone company customers are bypassing their local telephone companies; (2) between 19 and 53 percent of large-volume customers are considering plans to initiate or increase bypass activity; (3) customers bypass the companies to reduce their costs and improve service; (4) bypass could significantly reduce local telephone company revenues; and (5) the Federal Communications Commission evaluated bypass issues and its access charge decision and concluded that it should reassess its original decision and address the relationship between bypass actions and national telephone goals, including universal service and reasonable charges.

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