The Effects of Changes in the Telecommunications Industry on FCC Operations

In response to a congressional request, GAO discussed the effects of changes in the telecommunications industry on the operations, workload, and structure of the Federal Communications Commission (FCC). GAO focused its attention on issues raised by the recent FCC access charge decision, which changed the way in which the costs of providing long distance telephone service are recovered from users, and on the Computer II decision, which allowed common carriers to offer customer premises equipment and enhanced communications services on an unregulated basis. In general, GAO found that FCC has been conscientious in its efforts to carry out its regulatory responsibilities in the current dynamic telecommunications environment. In recent years, it has made a number of decisions to increase competition in the industry and eliminate unnecessary regulation. Further, it has made a variety of changes in its organizational structure aimed at improving operational efficiency. However, a number of important issues, including certain issues resulting from its Computer II decision, are still unresolved; and other important regulatory responsibilities, such as the development of a long-term methodology for allocating costs among telephone services, need attention. Further, in some instances, FCC has not carried out the analysis needed to fully determine the effects of its actions. This has increased the risk that FCC decisions will not achieve their objectives and may produce undesirable side effects.