The Federal Communications Commission's (FCC's) program for regulating domestic telecommunications common carriers is assessed in this report, and several recommendations are made to the Congress and the FCC for improving the regulatory framework provided by the Communications Act of 1934. A digest of the report and a review of the nation's telecommunications policy goals and the organization of FCC common carrier activities are provided, as well as discussions of the following topics: (1) development of competition in domestic common carrier telecommunications; (2) application of FCC price/earnings regulation; (3) costing principles and methodologies to prevent cross-subsidy (emphasizing the FCC's lack of success); (4) the FCC's limited progress in revising the uniform system of accounts; (5) deregulation of enhanced services and customer premises equipment, using separate subsidiaries as a procompetitive tool; (6) depreciation rate setting and its implications in a more competitive environment; and (7) the need for congressional action to ensure fair, nondiscriminatory access to local exchanges. Twelve appendices contain additional, detailed background information. A list of abbreviations and a glossary are included. (LMM)