GAO discussed the Federal Communications Commission's (FCC) implementation of the universal service provisions contained in the Telecommunications Act of 1996.

GAO noted that: (1) FCC did not have the authority to create the corporations to carry out government functions and operate under FCC's rules; (2) under the Government Corporation Control Act, FCC needs explicit statutory authority to establish or acquire such entities, which the agency did not have; and (3) FCC's argument--that it did not create the corporations but rather directed an intermediary to create them--does not relieve FCC of the requirements of the Control Act.