Good points Turnbull, in 1958, the FBI surveillance wasn't as sophisticated as today of course, so there assumptions might put Fredo as Underboss. They would also surmise that the bloodline is the determining factor. But Fredo did have some talents (beside two at a time) and intelligence. He was a gregarious, affable person who seemed to be well-liked. He was just a little nervous and jerky and had a weakness for drink and women.

Michael does make a reference to "Fredo and all of his men", Michael trusts him to carry $2 mil to Cuba, Fredo runs the brothels in Nevada....so maybe he is Underboss, but more in name than power.