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Telephone Communications: Controlling Cross-Subsidy Between Regulated and Competitive Services

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Report Type Reports and Testimonies
Report Date Oct. 23, 1987
Report No. RCED-88-34
Subject
Summary:

In response to a congressional request, GAO evaluated the Federal Communication Commission's (FCC) proposed implementation of accounting controls to prevent cross-subsidization between regulated and nonregulated telephone service in order to facilitate competition among telephone companies.

GAO found that: (1) the FCC allocation process was inefficient because it impeded companies from offering new services and imposed costs on the public; (2) the new process of cost allocation procedures and manuals, and an annual independent audit of the companies' cost allocation manuals, should ensure compliance; and (3) FCC believes that there is a need to further regulate the telephone companies in order to prevent cross-subsidizing of nonregulated services with regulated services and discrimination against competitors.

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