File No. 70-8233
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
AMENDMENT NO. 3
TO
FORM U-1
(AMENDMENT 3 INCORPORATES ALL CHANGES)
APPLICATION OR DECLARATION
under
The Public Utility Holding Company Act of 1935
THE SOUTHERN COMPANY
64 Perimeter Center East
Atlanta, Georgia 30346
SOUTHERN COMPANY COMMUNICATIONS, INC.
64 Perimeter Center East
Atlanta, Georgia 30346
(Name of company or companies filing this statement
and addresses of principal executive offices)
THE SOUTHERN COMPANY
(Name of top registered holding company parent
of each applicant or declarant)
Tommy Chisholm, Secretary
The Southern Company
64 Perimeter Center East
Atlanta, Georgia 30346
(Name and addresses of agents for service)
The Commission is requested to mail signed copies
of all orders, notices and communications to:
W. L. Westbrook John D. McLanahan, Esq.
Financial Vice President Troutman Sanders
The Southern Company 5200 NationsBank Plaza
64 Perimeter Center East 600 Peachtree Street, N.E.
Atlanta, Georgia 30346 Atlanta, Georgia 30308-2216<PAGE>
INFORMATION REQUIRED
The foregoing Application-Declaration (the "Application") is
hereby amended and restated to read in its entirety as follows:
Item 1. Description of Proposed Transactions.
1.1 Background.
The Southern Company ("Southern") is a registered holding
company under the Public Utility Holding Company Act of 1935 (the
"Act"). Its subsidiaries operate an integrated electric utility
system providing service to a contiguous 120,000 square mile area
comprising most of the states of Alabama and Georgia,
southeastern Mississippi, and the northwestern Florida (the
"Southern Territory"). Among its subsidiaries are Alabama Power
Company, Georgia Power Company, Gulf Power Company, Mississippi
Power Company and Savannah Electric and Power Company, each
conducting in its respective service area the business of an
operating electric utility company (collectively, the "Operating
Companies"), and Southern Company Services, Inc. ("Services"), a
subsidiary service company. Other subsidiaries include Southern
Nuclear Operating Company, Inc. ("Southern Nuclear"), Southern
Development and Investment Group, Inc. ("Development"), and
Southern Electric International, Inc. ("SEI"). (All subsidiaries
of Southern are hereinafter referred to collectively as the
"Subsidiaries").
In order to operate a coordinated and integrated electric
utility system, Services and the Operating Companies necessarily
have developed substantial expertise in communications and
substantial investment in communications technology, systems, and
equipment, the net book value of which is approximately $300<PAGE>
million. The central role of communications to efficient
electric utility service was recognized by the Federal Power
Commission:
The increased complexities of power systems and
extensive coordination of area and regional networks
have expanded the needs for the reliable communications
necessary for monitoring, supervision, and control.
Records indicate that the annual investment in power
system communication facilities increased at a rate of
about 10 percent for the years before about 1952, and
about 15 percent for the years since. A growth rate
similar to that for the latter period is expected for
at least the next 15 to 20 years.
Power system communications involve a wide variety
of functions and many different types of equipment. In
addition to the voice communication requirements, most
systems now utilize communication channels to transmit
system information to central control points; to
connect supervisory control terminals to their
associated remote stations; to operate teletype and
related information transfer facilities; and to
facilitate rapid signaling for high-speed protective
relay applications. Many larger utilities utilize
sophisticated communication systems in the high-speed
transfer of data for computer systems that perform
functions varying from periodic monitoring and the
annunciation of unusual conditions to automatic control
of some operational functions. There has been an
increasing trend in the use of digital equipment for
both data transmission and computation, and a number of
utilities are now using digital telemetering channels
to transmit information.
Utilities use virtually all of the common
communication media, such as wire lines, cables, radio,
microwave, and carrier-current circuits . . . . Most
utilities also make extensive use of mobile radio for
communication between control centers and operations
and maintenance personnel.
A sizeable increase is anticipated in intersystem
communications links, both for exchange of information
and for the control and operation of interconnected
systems. Improved reliability through status
monitoring and evaluation, real-time or on-line
simulation, and control methods will require
accompanying improvements in communication
facilities. . . .
2<PAGE>
Federal Power Commission 1970 National Power Survey, I-13-17-18.
Communications is integral to electric utility operations
because only through effective communications systems can
customer requirements be met efficiently, or even met at all. An
individual distribution circuit itself conveys the consumer's
instantaneous demand to the utility system; today, however,
customers and utilities need more information promptly (and
increasingly on a real-time basis) if consumers and utilities are
to make optimal use of their resources, such as through time-of-
use rates, interruptible rates and service, automatic load
control, and coordination with customer premises generation and
demand-side equipment. In the increasingly competitive
environment of today, the need to minimize overtime, to staff
crews efficiently and to meet customer needs promptly has
intensified the need for effective utility communications
systems.
The emphasis upon integration and coordination as the
elements that are essential to maintaining a utility holding
company system under Section 11(b) of the Act reflects the
integral nature of communications to efficient utility
operations. In the order approving formation of The Southern
Company, the Securities and Exchange Commission stated that "we
have been moved to permit the continuation of the proposed large
combination of electric properties under the common control of
Southern, in the main so as not to disturb their present and
historical coordination and efficiency . . ." The Commonwealth
and Southern Corp., 26 S.E.C. 646, 488 (1947). The order noted
3<PAGE>
specifically that there existed a "high degree of coordination of
the electric utility facilities" and particularly central
dispatch of generating plants from Birmingham, Alabama, dating
from 1930." 26 S.E.C. at 477-479. A common thread in the
administration of the integration standards of the Act has been
actual coordination of planning and operations, coordination
which has necessitated investment in communications
infrastructure. See e.g. New England Electric System, 38 S.E.C.
193 (1958); Electric Energy Inc., HCAR 13871 (1958) (including
telemetering and microwave systems).
Heretofore, each of the Operating Companies has generally
been responsible for its own communications systems, including
mobile radio systems. Mobile radio systems are typically used in
connection with interruptions in service or other "trouble",
communication among crews and dispatchers, with customers, with
state and federal public safety and emergency officers and
officials, and for normal business contact between offices and
personnel operating on business outside the office, particularly
in connection with transmission and distribution line
construction, maintenance, and operations, and other sales and
service activities. The existing Operating Company systems have
been developed on a company by company basis, and generally do
not share compatible equipment or facilities. Therefore, system
personnel are not able to communicate with each other over the
same communication system. Thus, when an Alabama crew goes to
Georgia or a Georgia crew goes to Florida or a Florida crew goes
to Alabama in the wake of an emergency, they are not able to
4<PAGE>
communicate properly. Also, among the Operating Companies,
operational support concerning routine operations has grown in
frequency as the Southern electric system has striven to
standardize equipment and to use crews and control systems
efficiently. In addition to the wireless communications
fragmentation among Operating Companies, there is a significant
amount of fragmentation within Operating Companies. For
example, at Georgia Power, an 800 MHz mobile radio system is in
place within the Atlanta Metro Region, whereas other portions of
Georgia Power's system utilize a 450 MHz system. Effective
utility service has required redefining the "Atlanta Metro"
service boundary within Georgia Power on several occasions,
resulting in customer service and operating districts having
fragmented mobile communications. At the same time there has
been substantial centralization of the transmission and
distribution dispatching functions at Georgia, increasing the
need for wide area integrated wireless communications. These
developments make continued maintenance of a fragmented mobile
radio system intolerable from an operating standpoint.
Compounding these problems is the fact that the Federal
Communications Commission ("FCC") has proposed that frequencies
now used in large measure for utility communications be assigned
for other purposes, and that utilities "refarm" their
communications to other frequencies, such as 800 MHz.
Traditionally, public utilities, some governmental units,
and many businesses have located their communications in lower
frequency bands. As wireless communications have grown in these
5<PAGE>
lower frequencies, interference has increased and scarcity of
available channels and air time has developed. The F.C.C. has
responded by proposing narrower frequency spectrum bands for
those remaining in the lower bands (which will necessitate the
use of new or significantly modified equipment for use in the
lower bands). See F.C.C. Notice of Proposed Rulemaking, Revision
of Regulations on the Private Land Mobile Radio Services,
Modification of Policies, Private Radio Docket 92-235, 7 FCC Rec.
8104, 57 Fed. Reg. 54034 (November 16, 1992). When this will go
into effect is not known and there is substantial uncertainty
about the matter of the F.C.C.'s final plan, but those
modernizing their wireless communications must take into account
the virtual certainty that it will occur within the next few
years.
Under these pressures, the Operating Companies of Southern
have begun a piecemeal transition to 800 MHz. Gulf Power Company
has temporarily deferred an otherwise imminent construction of an
800 MHz radio system pending the decision to implement the
project described herein. Georgia Power Company also currently
plans to implement a statewide 800 Mhz radio system. Mississippi
Power Company has installed an analog, as opposed to digital, 800
Mhz system. Dissatisfaction with the absence of a true
interconnect to the telephone system has caused many Mississippi
Power Company mobile radio users to use a cellular telephone in
addition to the radio. Use of new digital technology will
eliminate the need for this duplication. Alabama Power Company
currently operates a 450 MHz system, suffers problems with
6<PAGE>
congestion, and had planned to implement a transition to 800 MHz.
The current Savannah Electric and Power Company 800 MHz system is
incompatible with the existing Georgia Power Company system.
When a new mobile radio system is installed, the equipment vendor
will purchase the existing equipment (mobile units, hand sets,
base transmitter/receivers and related items) from each of the
Operating Companies for the market value thereof and give each
one credit which they may use for purchases from the vendor.
The existing radio systems have coverage areas scattered
throughout the Operating Companies' service areas and in areas
where Operating Company personnel have frequent need to travel,
including along transmission corridors and within the service
areas of interconnected utilities. All of these mobile radio
systems were built and are being used in connection with the
construction, operation, maintenance and use of the electric
generation, transmission and distribution facilities of the
Operating Companies, and for other related purposes in connection
with the Operating Companies' electric utility operations,
including communication and coordination of operations with
governmental units and other utilities. The personnel of the
Subsidiaries utilize mobile radio communications for the full
range of business requirements that any electric utility, and
indeed, any business would have. Thus, the mobile radio systems
are used for communication with repairmen, linemen, and other
operating personnel; they are used for safety and operating
programs and practices concerning generation facilities,
including nuclear generation facilities; they are used by sales
7<PAGE>
and marketing personnel; they are used for evaluation of remote
meter reading technologies and other energy management programs;
they are used by personnel for industrial development activities;
and they are used generally by persons having need to be away
from their headquarters or base of operations for communication
with other personnel and with headquarters or bases of operation.
As utility and customer data applications continue to
develop, other related purposes will include more extensive
remote meter reading, real time pricing, load control and
coordination, demand-side management, transmission of data
between service vehicles and home offices, and other similar
uses. Particularly as retail customers rely more on time of use,
energy management, and demand side programs that are responsive
to system (and market) marginal costs, field access to data has
become essential to effective customer service. Efficient field
operations also require wireless access to data, including
automated mapping and facilities management. Wireless data
access will meet a critical emerging need within all levels of
electric utility operations. However, in order to make practical
use of wireless data transmission on a mobile basis, digital
technology must be employed.
These developments pertaining to conventional mobile
communications and mobile wireless data transmission coincide
with the separate rapid growth of internal wireless two-way
communications within Southern Company through thousands of
analog cellular telephone units. All of these developments
8<PAGE>
reflect the growing importance of mobile communications within
the 120,000 square mile Southern Territory.
Southern has concluded, based upon the foregoing factors and
the increased need for intercompany coordination, as well as
equipment obsolescence, that the Operating Companies' existing
mobile radio systems are unsuited to their needs and need to be
modernized, updated and replaced. More modern digital technology
needs to be employed. Moreover, experience in connection with
ice storms, hurricanes, and other emergencies have pointed toward
an increased need to establish a radio communications system
which is also compatible with public safety and emergency
agencies and which provides for effective communications between
those agencies and the Operating Companies.
These pressures coincide with the emergence of commercially
available digital multiplexed 800 MHz mobile radio technology
that will enable Southern to meet these communications needs
through a wireless system that performs the functions of two-way
voice, dispatch and data transfer on a seamless, integrated
basis. Thus, it has been concluded that the separate mobile
radio systems will be replaced with a fully integrated system-
wide digital 800 MHz radio system and related communications
services.
Southern sought proposals and bids from recognized suppliers
of wireless communications technologies. Motorola recommended
its MIRS technology and submitted a bid. While two other bidders
were sought out, only one other submitted a bid and that bid did
not meet Southern's full technological requirements and was
9<PAGE>
significantly more expensive than the Motorola bid. Accordingly,
Southern has selected the Motorola MIRS ("Motorola Integrated
Radio System") technology. This technology is digital. As such
it offers the ability to use frequency spectrum more efficiently
than analog and requires less frequency "space" for message
transmission. It also allows for the transmission of voice,
data, and facsimile, all on a more frequency efficient and
enhanced quality basis, particularly when compared to the
existing technologies now employed by Southern and those now
available which alternative suppliers have offered. The
particular technology selected has been designed with the multi-
functionality Southern and its Operating Companies need:
dispatch radio, cellular-like phone, paging, data and facsimile
transmission, and telephone interconnect. It can meet, by design
and with limited modification, all of Southern's wireless
technology needs. This was not yet available from other
potential suppliers who have not as yet developed an adequately
comprehensive competitive alternative. MIRS uses Time Division
Multiple Access Modulation ("TDMA") by which six messages may be
transmitted simultaneously over one channel. This vastly expands
the communications capacity of scarce radio spectrum, creates
excess capacity, and therefore provides room for growth.
Varieties of TDMA are Frequency Division Multiple Access ("FDMA")
and Frequency/Time Division Multiple Access ("F/TDMA"). The only
offerings of FDMA and F/TDMA were by alternative suppliers who
were working on systems employing them, but could not promise
10<PAGE>
their availability for several years and would not represent any
more than a 4:1 efficiency rather than the 6:1 of MIRS.
By virtue of the technology employed, system design and
anticipated patterns of usage by affiliates, Southern estimates
that it can meet system wireless communications needs and still
have enough capacity to serve a large group of non-affiliate
users, with small incremental expense. Indeed, eighty percent to
ninety percent of users may be non-affiliates, without requiring
significant incremental investment and without compromising
electric utility usage.
It has been suggested that additional technology could have
been purchased to add to the existing technologies employed by
Southern to modernize its existing system, rather than install a
whole new system. Such a solution is unacceptable because it
does not address the need for one compatible system across
Southern's territory, refarming, spectrum efficiency, multi-
functionality, and other issues. Management has determined that
"patching" the old systems would not be cost-efficient or meet
Southern's future needs for wireless communications.
Southern has initiated the license application process at
the FCC to obtain the necessary frequencies and has contracted to
obtain the necessary equipment and technology. The frequency
applications have included Industrial Land Transportation
("ILT"), General Category and Specialized Mobile Radio (SMR) 800
MHz frequencies. There are not sufficient ILT and General
Category frequencies available to meet Southern's needs in
congested markets, such as Atlanta. However, the combination of
11<PAGE>
the ILT, General Category and SMR licenses and the applicability
of intercategory sharing procedures should enable Southern to
have sufficient licensed frequency capacity.
Southern is in the process of acquiring additional licenses,
including SMR licenses from others. As an example, Motorola has
offered to sell certain licenses to Southern and negotiations are
in progress. As part of the Hart-Scott-Rodino processing of the
Motorola/Nextel/Dial Page business combinations, the Justice
Department and Motorola/Nextel/Dial Page have agreed to divest
themselves of 42 SMR channels in metro Atlanta. These are the
subject of negotiation between Southern, Motorola and Nextel.
The additional frequencies Southern seeks, particularly in
urban areas, reduce the number of cell sites and towers required
for the transmission of wireless messages. They increase the
volume that a particular tower can handle. Given the problems
and cost of acquiring and constructing sites and tight land use
controls in urban and suburban locations, the ability to acquire
adequate frequency licenses lowers unit marginal costs and
provides an incremental reduction in cost. Acquiring S.M.R.
licenses in metro Atlanta where clear ILT channels are not
available enhances economies of the system but also provides the
commercial opportunity to serve others.
The licenses are currently being issued by the FCC in the
name of Southern and will be transferred to Communications upon
approval of this application. The new system will consist of
towers, transmitters, telecommunications network facilities,
associated vehicular and portable mobile user equipment, and
12<PAGE>
control stations spaced to provide coverage throughout Georgia,
Alabama, northern Florida, on or north of Florida Highway 40 (to
cover the general service areas of Gulf Power Company,
transmission corridors to interconnected utilities including
Southern's largest wholesale customers and a corridor to
Tallahassee, the state capital), Southern Mississippi (to cover
the general service area of Mississippi Power Company) and a
corridor to the state capital in Jackson, Mississippi (the
"Expanded Southern Territory"). This area is designed to provide
coverage throughout the Operating Companies' service area and in
adjacent areas such as along transmission corridors between the
Southern system and interconnected utilities corridors, to
include state capitols, and to include areas in which operating
personnel are often dispatched to restore service following
storms and other emergencies.
Southern has completed 95% of the design for the Southern
System area ("Internal System"), comprised of substantially all
of the State of Georgia, the operating areas of Alabama Power
Company in Alabama1, the Gulf Power Company service area within
the panhandle of the State of Florida2, and the twenty-three
counties in Southeastern Mississippi served by Mississippi Power
- ---------------
1 Which excludes the area in North Alabama served by the
Tennessee Valley Authority, an area which is included in the
Expanded Southern Territory.
2 Excludes the area east of Gulf Power Company's utility
service area to Tallahassee, Florida, which is considered as part
of the Expanded Southern Territory.
13<PAGE>
Company.3 This Southern System area corresponds to the 120,000
square mile service area wherein Southern is responsible for bulk
power and retail service on an integrated basis and maintains a
continuous integration of supply and demand for power as approved
by the Commission. Coverage of this Internal System area will
require development of approximately 280 cell sites. The Internal
System infrastructure investment required will be approximately
$140.4 million. (A map showing approximate tower locations is
attached as Exhibit B-1.) While it had initially been
anticipated that the average cost of a site might reach $650,000,
this has not proven true. Many sites are located in rural areas
with low land costs and with small amounts of anticipated
communications traffic, thereby offering significant economies.
Many sites, in fact, cost less than $250,000 each. Southern
estimates that approximately thirty additional sites, mostly in
rural areas, will be necessary to extend service to the Expanded
Southern Territory.
Even the Expanded Southern Territory should be considered as
related to the necessary and appropriate operations of the
Southern electric integrated utility system and incident thereto.
This is because the areas embrace territories of large bulk power
customers of the Southern electric system, transmission line
corridors used for interconnection and delivery of power, routes
of travel routinely utilized by Southern system personnel, and
state capitols where regular system business is conducted.
3 This excludes the connection to Jackson, Mississippi,
which is considered part of the Expanded Southern Territory.
14<PAGE>
Moreover, Tallahassee (North Florida), Jackson (Southern
Mississippi) and Jacksonville (southeastern Georgia) all serve as
the major commercial/trading area centers of portions of the
service areas of the Operating Companies.
The system to be constructed will reflect the high service
requirements of utility grade systems. Unlike typical commercial
systems, the Southern network will be equipped with backup power
such as spare generators and large batteries able to operate for
up to eight hours in the event of power failure. These and other
features make the Southern system "utility grade." Indeed,
emergency operations and essential utility communications will
have the technological ability to obtain priority for the
transmission of messages in the operation of the system, even
when it is in use by others. Southern intends to build its
system out promptly and transfer its existing wireless traffic to
the system as it becomes operational. Southern currently uses
13,000 mobile radios and an indeterminate number of cellular
telephones, believed to be in the thousands. Rapid build-out on
a system-wide basis is necessary in order to obtain construction
and procurement efficiencies, to provide the benefits of
integration, and to meet the pressing needs of the Operating
Companies. Federal Communications Commission regulations also
require the prompt build-out and utilization of systems and
frequencies. Failure to build-out the system would risk losing
access to needed frequencies. The construction of some cell
sites has already been completed and they are capable of
operation in the transmission of voice and data. It is
15<PAGE>
anticipated that the entire system will be completed and
operational between January and April of 1995. Particularly due
to the newly emerging nature of data applications, Southern's use
of the capacity of its system will increase greatly in subsequent
years.
The system Southern is installing is the minimum system that
will allow it to meet its internal wireless communication needs
in an integrated fashion and permit it to control its wireless
communications costs over the life of any new investment while
optimizing the use of wireless communications for current
wireless operations and emerging utility applications. Other
technologies (i.e., analog) would rapidly lose value and
usefulness due to technological obsolescence. This system will
lead to faster routine restoration of service, faster restoration
of service in response to storms, reduced transmission and
distribution outages, and improved safety though improved and
direct communications between system and district (or trouble)
dispatchers and crews and improved coordination with public
safety agencies and other users of public rights-of-way. The
telephone interconnects will permit direct communications between
customers and field personnel and quick access to information by
field personnel. The data transfer benefits for system
operations are enormous because the wireless system can serve as
infrastructure to support distribution automation, demand-side
management, remote meter reading, automatic vehicle location, and
field access to local area networks, wide area networks, and the
automated mapping and facilities management system.
16<PAGE>
As noted above, this system is the minimum system that can
provide these needed utility service features to the Southern
electric system. State and local government public safety and
related functions have field communications needs that closely
parallel those of Southern. In addition, these entities have an
ongoing need to coordinate emergency operations with Southern and
Southern's coordination with them would benefit from sharing
compatible systems. The upcoming 1996 Olympic Games illustrates
the need for improved wide area coverage, with venues being
utilized in Atlanta, Augusta, and Savannah, Georgia, and
Birmingham, Alabama. Coordination of public safety and public
utilities will require extensive and well coordinated wide area
wireless communications. Recent storm experience has also
illustrated the need for improved wide area wireless
communications in order to coordinate public safety and emergency
management agencies and utilities. Among potential commercial
customers, public utility companies with extensive rights-of-way,
and with which Southern has a communications need in the ordinary
course of operations, represent a significant subgroup.
Non-affiliated electric utilities located in the Southern
electric system geographic region represent a particularly
appropriate user group. While they have been considered as
unrelated additional potential customers, they are in fact
closely related to the utility operations of the Southern system.
Municipal electric systems share common facilities with the
Operating Companies such as integrated transmission systems and
generating plants. Non-affiliate electric utilities routinely
17<PAGE>
engage in the purchase of bulk power from the Southern electric
system. In emergency situations, communications needs of non-
affiliate utilities closely parallel those of Southern and its
affiliates and close coordination of communications between
affiliates and non-affiliates is often useful or necessary to
maintain or restore service. Further, the special utility data
and other features of the new communications system will meet
common needs. Interconnected utilities will benefit from their
ability to access a common communications system which
facilitates coordination between the various utilities in the
region. A common data transmission communications platform
should enhance efficiencies for affiliates and non-affiliates
alike, benefitting both types of utilities. Thus, there is a
substantial nexus between Southern's communications needs for its
integrated utility system and the use of that system by non-
affiliate utilities such as municipalities and cooperatives,
particularly since they have need to communicate with one another
in the ordinary course of business continuously. (See also Item
1.7, "Interconnected Utilities").
The Southern electric system wireless communication system
will not represent entry into the general mass market
telecommunications market because it is tailored to the multiple
functions required by utility operations and its multiple
functions are not required in that broader market. Public safety
and other government agencies and businesses whose needs are
parallel to those of Southern can provide a source of revenues to
amortize the cost of the system marketing "excess capacity"
18<PAGE>
(discussed herein), spreading recovery of the infrastructure cost
over a wider usage base, thereby taking advantages of economies
of scale and reducing the costs to be borne by Operating
Companies and electric utility customers. A copy of the Mobile
Radio Business Plan is submitted as Exhibit B-2A, which excludes
confidential proprietary data. Updated financial projections are
submitted as Exhibit B-2B but on a confidential basis under Rule
104, since the latter contains commercially and competitively
sensitive information and strategies.
Where all or most 800 MHz Specialized Mobile Radio ("SMR")
frequencies have already been licensed to third parties, the
process by which Southern would acquire the required number of
channels will be through a negotiated purchase of such channels
from third parties, together with any related facilities that
such third parties may already have constructed. In addition,
independent holders of frequency licenses may give Southern's
network access to such frequencies by permitting the frequencies
to be used in the system and contracting for services in
operating the frequencies with Southern's new subsidiary in
accordance with FCC rules. To permit system-wide coverage and
interconnection with the public switch telephone network, the 800
MHz fixed transmitter stations will be networked together,
employing microwave and landline telecommunications facilities
(such facilities will either be installed by Communications or
leased from others, where available).
We also note that a settlement has been reached between
Motorola, Nextel and the United States Department of Justice,
19<PAGE>
Antitrust Division, which will make available an additional 42
SMR channels in Atlanta in order to enhance competition by
requiring Nextel, upon its acquisition of Dial Page, to sell such
licenses to unaffiliated third parties. Southern anticipates
attempting to acquire such licenses in order to meet the public's
need for competition.
Southern's investment in the subsidiary in order to serve
voice, dispatch and data requirements of the Internal System is
estimated to comprise substantially all of the requested
authority of $179 million. This investment includes the above-
mentioned $140.4 million in infrastructure, approximately $12.8
million in prepaid operations and maintenance and approximately
$25.8 million working capital and frequency license acquisition
costs.
Southern also requests authority to proceed with service to
the Expanded Southern System territory. Authority to include
North Alabama, Jackson, Mississippi, and Northern Florida would
enable Southern to amortize its investment more efficiently and
would facilitate utility-related communications.
Of the total of $179 million, only a small portion is
incremental expenditure to provide necessary coverage for non-
affiliates. Incremental equipment expense has been less than $7
million to this point. It is anticipated that total incremental
expense for service to non-affiliates will be less than $20
million. This estimate includes additional licenses, additional
towers, and additional, enhanced or specialized equipment
allocable, in whole or in part, to non-affiliate needs as well as
20<PAGE>
a portion of working capital attributable to marketing and
service to non-affiliates. The system will be primarily offered
to associate public utility companies and to the industrial,
commercial and other retail and wholesale customers of the
associate companies, including interconnected utilities, as well
as federal, state and local public safety, law enforcement, and
emergency management governmental agencies, as well as other
agencies of the governments of the states of Georgia, Alabama,
Mississippi and Florida (the "Base Service"). Base Service would
also include service to other affiliates and subsidiaries of
Southern, to the extent they are located within the Expanded
Southern Territory. The Base Service would enable communication
on a modern technological basis and would enable radio
transmission of both voice and data within the authorized
territory.
1.2 Organization of Communications as Subsidiary Company.
In order to facilitate the development, ownership and
financing of the wireless communications network, as well as
future development of additional communications services which
are integrated and compatible for the Southern electric system,
Southern proposes to form a new communications subsidiary
company, Southern Communications Services, Inc.
("Communications"), and to acquire all of its authorized capital
stock directly. The authorized capital stock is 1,000 shares,
having a par value of one dollar per share. Communications will
provide the following services ("Communications Services") it
will design, construct, finance, maintain and operate the
21<PAGE>
Southern Electric System's future communications systems,
including a wireless communications network that, when complete,
will provide contiguous or "seamless," wireless service
throughout the Expanded Southern Territory; it will also manage
all equipment sales, procurement and inventory maintenance
activities, represent the Southern system in any necessary
licensing activities before the FCC and become the FCC licensee
of necessary licenses and acquire and hold any other rights or
interests in property (e.g., leases of transmitter towers)
necessary for the construction, networking together, and
efficient operation of this network; it will also provide
operations, maintenance, management and technical services for
frequency licensees in connection with frequencies which third
parties own which are used in connection with the wireless
systems of Communications; and it will operate a communications
company for its customers offering the latest in communications
services and equipment to them. Communications will offer the
Base Service within the Southern Territory on a modern
technological basis which would enable transmission of both voice
and data. Any excess capacity beyond the Base Service would be
marketed to others.
In connection with a wireless communications service, the
definition of excess capacity is not a simple matter. Unlike
fiber optic cable where separate individual strands of fiber are
easily identified, trunked radio operations dynamically
reallocate frequency spectrum through the air on a call by call
basis. Technology and time of use, as well as extent of use and
22<PAGE>
patterns of use, all cause variation in excess capacity. The
term excess capacity, therefore, in the context used for the
wireless communications service means the capacity which does not
interfere with or preclude the communications necessary for
operation of the Base Service. As an example, in connection with
the rendition of service for state public service agencies and
emergency services of municipalities and other governments, it is
anticipated that a portion of such classes of users and other
holders of radio frequency licenses may place their own radio
frequencies within the system and have Communications manage the
frequencies so that they can be integrated on a compatible basis
and operated in the overall service, but they would be reserved
for emergency communications with the ability to "spill over" to
other frequencies when necessary. While this is not the
exclusive means by which governmental agencies will be served, it
indicates one of the predominant methods by which the public's
need for coordinated communication would be met without
interfering with either Southern's private needs or those of
other emergency agencies. At the same time, however, such an
approach affords Southern the ability to recover the cost of its
system in part from parties other than the Operating Companies.
The terms and conditions of marketing excess capacity are being
developed in conjunction with the implementation of the system.
It is expected that users will be charged a monthly service fee
in addition to a charge based on the actual use of the system
through assessed charges for times of use. The monthly service
23<PAGE>
fee and the time of use charges will be based upon competitive
fair market value pricing.
1.3 Transactions Between Affiliates.
Southern submits that the provisions of Rule 81 may be
applicable to the proposed transactions.
Under the applicable law, 47 U.S.C. Section 332(c)(1), the
provision of commercial mobile radio service here involved is
subject to rate regulation by the F.C.C. (and by states to the
extent they can establish that competition does not ensure
reasonable rates and the protection of consumers). Another
provision, 47 U.S.C. Section 262, requires that the rates, terms and
conditions be just and reasonable and non-discriminatory, giving
the F.C.C. explicit regulatory jurisdiction to pass upon all
charges and practices. Still another provision, 47 U.S.C. Section 203
may require the filing of tariffs. Although current F.C.C.
policy does not require such tariffs for SMR's, the right to
impose such a requirement on a case-by-case basis is retained by
the F.C.C. In any event, the provisions of 47 U.S.C. Section 208 give
the F.C.C. the duty to pass upon the lawfulness and
reasonableness of S.M.R. rates in a complaint brought by any
other person or party, including State Commissions. Accordingly,
the rates involved are completely and normally subject to public
regulation by the F.C.C. which has primary jurisdiction over
telecommunications and may also be subject to state regulation.
It is the intention of Southern and Communications that the
provision of wireless communications services be charged to
affiliated customers on the basis of market prices -- the
24<PAGE>
transactions will be on terms which are comparable to those
offered to non-affiliated customers, having due regard to any
differences of quality or quantity.
The proposed transactions, to the extent of affiliate
transactions, raise special and unusual circumstances because of
the large number of unaffiliated parties which may be served and
the question of the actual exercise of jurisdiction by the F.C.C.
Thus, in recognition of these special circumstances, Southern
proposes as follows. Communications shall charge the Operating
Companies and the Service Company4 for services, facilities or
goods at the lower of (i) the cost of such services, facilities
or goods, or (ii) the "market value" of such services, facilities
or goods. "Costs" shall be determined in accordance with Rules
90, 91 and 92. "Market Value" shall mean the price and terms
comparable to those normally offered to unaffiliated customers
having due regard to any differences in quality or quantity, or,
if no such comparability exists, the price and terms which the
affiliated purchaser might reasonably be expected to obtain
elsewhere, giving due regard to quantity, quality, reliability
and other factors entering into the calculation of a fair price.
- --------------
4 It is anticipated that some Service Company personnel
having a need for wireless communication such as those now using
cellular phones and those Service Company personnel working in
the field with Operating Companies will have need for at least
some of the mobile radio (dispatch), paging, and cellular-like
phone services to be provided by Communications. Their
communications expenses incurred would be charged by the Service
Company to the customers of the Service Company and in the case
of transactions with the Operating Companies, the Service Company
would pass through the incurred expenses to the Operating
Companies in accordance with established procedures.
25<PAGE>
In the event that the Federal Communications Commission shall,
pursuant to its statutory authority by order require the filing
of a tariff, or by adjudication with respect to the ratemaking
authority set forth herein, approve, prescribe or determine the
applicability of a different rate or charge, the decision of that
Commission shall govern and Communications will file a post-
effective amendment to reflect such action and its result.
Because the Commission and Congress are both considering new
proposals reflecting dialogue over appropriate telecommunications
pricing, the participation of electric utilities in
telecommunications services, and other related matters, and
because of the special and unique circumstances involved in this
new venture, Communications requests that the Commission reserve
jurisdiction over the terms for pricing of communications
services between affiliates in the light of subsequent events,
including changes in law or regulation and the actual experience
of the parties.
Communications believes the pricing formulation will provide
for market pricing for the foreseeable future. It recognizes
that the F.C.C. has chosen to forebear active price regulation at
present but may exercise such authority at any time in the
future. It is estimated that market pricing will result in an
annual reduction in costs to the Operating Companies of
$6,000,000 per year as compared to fully allocated costs of the
26<PAGE>
system without service to outside customers.5 The proposed
pricing methodology will result in operating expenses such as
general and administrative expenses and overheads being spread
more evenly over all users, regardless of class, and only those
designed and dedicated to a specific class will be the exception.
The Operating Companies and their ratepayers will be the
beneficiaries of economies of scale because their proportionate
share of overheads and general and administrative expenses and
non-variable expenses will be reduced as a result of the
participation of other customers. It is anticipated that in the
early years of operation by Communications, until it attracts a
large base of unaffiliated customers, the Operating Companies
will be charged market rates which will be below allocated costs.
Communications, not the Operating Companies or their ratepayers,
will bear the "market risk" of attracting outside customers, with
the result that they will receive market rates at below cost
regardless of the degree to which non-affiliate customers are
obtained. While Southern and Communications believe the proposed
- ----------------
5 In 1992, Georgia Power Company estimated independently
that it would require an investment of $62 million by it to
construct its own 800 MHz digital system infrastructure, limited
to its own use. The annual levelized revenue requirement for
such a system, recovered from ratepayers, would be $9.6 million,
including estimated operations and maintenance expenses. This
calculation included a capital structure of 45% debt, 10%
preferred stock and 45% common stock; cost of capital at 8.3% for
debt, 7.8% for preferred and 12.25% for common equity; and
depreciation over 17 years for book purposes and 15 years for tax
purposes. It is anticipated that the comparable annual costs to
Georgia Power of the proposed service by Communications on a
market basis will be slightly in excess of $3 million. Extended
to all of the Operating Companies, it may be inferred that actual
savings will greatly exceed the estimate.
27<PAGE>
investment is prudent, the success or failure of the venture will
be borne by Communications and Southern, not the Operating
Companies or ratepayers.
While there are many groupings and sub-groupings of wireless
telecommunications services and market prices typically state
both bundled and unbundled rates and services, the three basic
services which can be provided by the new wireless system are
cellular-like phone service, paging, and dispatch (mobile radio)
service. Communications intends to establish a schedule naming
market based prices for the variety of services which it will
offer to the Operating Companies. No single entity presently
exists offering all three kinds of service within the relevant
territory on an area-wide basis. However, comparable market
prices do exist for certain segments. As an example, the
Operating Companies presently pay to Bell South Mobility and
Cellular One a series of charges including a $20.00 per month
basic charge for cellular phone access, a per call charge of $.25
per minute, and roaming charges of $2.00 to $3.00 per day, plus
$.65 to $.99 per minute. The roaming charges are particularly
important because the cellular providers do not provide full area
wide coverage encompassing, as an example, all of Alabama Power's
territory or all of Georgia Power's territory, let alone a
service over the entire Southern electric system. On average,
the companies pay in excess of $100 per month for each cellular
phone user based upon current market prices. In addition,
Sattelink, a non-affiliated commercial paging company, provides
paging service to Georgia Power at low competitive prices. This
28<PAGE>
paging service is $25.00 per month for state-wide service in
Georgia, and $32.95 per month for regional coverage. With
reference to dispatch services, there is no single SMR provider
providing trunked radio dispatch service throughout the Southern
electric system operating territory. A survey of existing
dispatch specialized mobile radio operators shows that the charge
for basic dispatch service in the Southern electric system's
region is a base charge of $10.00 to $15.00 per month for one
tower with a charge of $2.00 to $3.00 per month for each
additional tower provided. Those persons employed by the Service
Company or the Operating Company needing area-wide coverage would
use ultimately approximately 280 towers. Personnel within
Georgia Power just needing access to state-wide service in
Georgia would require approximately 140 towers. Communications
will offer its schedule of rates and charges for paging, phone
and dispatch service on both a bundled and unbundled basis, and
in each instance, the rates and charges named will be below the
market rates identified above, all of which are rates and charges
now actually paid by the Operating Companies. Periodically, and
at least annually, the rates and charges will be compared against
cost of providing service to the Operating Companies and Southern
Company Services to assure that the market charges do not exceed
cost as defined herein and as described and discussed in Item 1.6
below and Exhibit D. If they do, they will be adjusted
accordingly in the next billing period.
All other transactions between Communications and associate
companies which are not subject to F.C.C. and/or state rate
29<PAGE>
regulation (other than transfer of F.C.C. licenses) will be at
cost in compliance with Rules 90 and 91.
Various subsidiaries of Southern now own or operate landline
telecommunications facilities (fiber optic and conventional
metallic cables), supplemented by landline cables leased from
communications common carriers. The Operating Companies and
Services have also constructed and are now operating microwave
facilities (microwave facilities jointly owned with others will
not be affected by the proposed system). This telecommunications
system is being used, and has been used for a number of years,
for internal communications among companies in the Southern
electric system and interconnected utilities for electric
utility-related purposes. These telecommunications facilities
are used to transmit both voice and data traffic, including
signals that control the coordinated operation of the system's
electric generating plants and electric transmission grid. To
the extent permitted by existing contractual arrangements with
third parties, and subject to capacity and regulatory
constraints, where they exist, it is possible that wholly owned
facilities of the Operating Companies such as towers or tower
sites or landline connections will be used to provide network
interconnections of the mobile radio system through contract.
Where joint use of facilities such as towers, tower sites,
microwave, or landline communications are entered into, or access
and use are granted to Communications by the Operating Companies,
the use and costs thereof will be measured and these costs
reimbursed in accordance with Rules 87, 90 and 91, including the
30<PAGE>
"at cost" arrangements set forth in Exhibit C (Southern Electric
System Telecommunications Network Agreement).
In summary, affiliate pricing would be as follows:
(a) The wireless service sold to affiliated Operating
Companies by Communications would be at the lower of cost or
market as described above, but subject to potential F.C.C.
regulation;
(b) the use of microwave or fiber optic lines, as
distinguished from the wireless radio, phone and paging
services, would be governed by Exhibit "C";
(c) miscellaneous use of other facilities, such as the
use by the Operating Companies of Communications' towers to
attach Operating Company microwave dishes, would be charged
at the incremental cost of allowing the use or access.
In conjunction with the development of the new system-wide
approach to communications, Southern has determined that it would
be desirable from an operational and management standpoint to
coordinate under Communications all or substantially all of the
communications related activities of the Southern system,
including ownership and maintenance of existing and future
microwave and landline telecommunications facilities to the
extent they are not already co-owned with other utilities. Other
than as may occur as set forth in the paragraph immediately
above, no transfer of these facilities will take place without a
further application to the Commission and its subsequent
approval, as well as the approval of state commissions to the
extent of their jurisdiction.
31<PAGE>
In anticipation of the development of the communications
system, Southern has been acquiring radio frequency licenses from
the Federal Communications Commission ("Licenses"). Certain of
the Operating Companies (Georgia, Mississippi and Savannah) held
a small number of Licenses which have been assigned to Southern
without impairing the ability of the Operating Companies to have
full use and enjoyment of the frequencies represented by the
Licenses. The Operating Companies have been reimbursed for the
licenses at cost. The amount of reimbursement to the Operating
Companies for the licenses has been $3,771.44, representing all
identified costs of license acquisition. Should additional costs
be identified or discovered, they will be the subject of
reimbursement. The licenses will in turn be transferred by
Southern to Communications. The Operating Company licenses are
as follows:
Operating Company Call Sign Grant Date
Georgia Power WNCE 625 11/1/93
Georgia Power WNAU 559 1/10/94
Georgia Power* WPBW 494* Pending *
Georgia Power* WPBW 495* Pending *
Mississippi Power WNYB 897 11/1/93
Mississippi Power WPAJ 830 11/1/93
Mississippi Power WPAJ 831 11/1/93
Mississippi Power WPBQ 356 11/1/93
Mississippi Power WPBY 913 11/1/93
Mississippi Power WPAR 582 11/30/93
Mississippi Power WPBQ 357 11/30/93
Mississippi Power WPCW 623 11/30/93
Savannah Power WNJK 200 11/1/93
Savannah Power WNKE 940 11/1/93
- -------------------
* Applied for in the name of Georgia Power
for convenience at the instance and expense of Southern and for
the benefit of Communications in order to trunk with WNBAU 559
which, at the time of filing of the license applications, had not
been transferred to Southern or Communications.
32<PAGE>
All of the above licenses are in the 800 MHz band, and
nearly all are I/LT stations. None are the more expansive SMR
category. I/LT channels may be used by specified industries and
may not be converted to other categories except by a holder of
licenses in those other categories (i.e. Georgia Power could not
convert an I/LT to SMR unless it already held a fully loaded SMR
license and needed more SMR capacity). SMR channels may be used
to serve the general public. The following proposed conditions
essentially moot quarrels of relative values of any license since
the ability to sell the license to non-affiliates has been
diminished to the point of practical elimination. In order to
preserve the licenses for the benefit of the Operating Companies
and in order to ensure fairness, even though none of the licenses
in question were rate based assets or obtained through impacts on
ratepayers, Southern proposes as follows:
Transfers of F.C.C. licenses from the Operating Companies to
Southern or to Communications shall be subject to the following
conditions:
(a) The transferee shall pay as consideration to the
Operating Company originally holding the license(s) a sum
equal to the Operating Company's cost of acquisition of the
license(s);
(b) The transferee shall pay such additional
consideration, if any, for the transfer of the license(s) as
the State Commission having jurisdiction over the retail
rates of the Operating Company originally holding the
license shall determine in a valid final order issued
33<PAGE>
pursuant to applicable state law, provided such
consideration does not exceed the fair market value of the
license(s) at time of transfer, but taking into account the
effect of these conditions on the value of the license(s);
(c) Any license(s) transferred from an Operating
Company to Southern or to Communications shall be subject to
the right of the Operating Company to repurchase the
license(s) for the amounts it received pursuant to (a) and
(b) above upon thirty (30) days notice from the holder of
the license of the occurrence of either of the following
events: (i) the proposed sale or transfer of the
license(s) to an unaffiliated party or (ii) the permanent
cessation of use of the license for the benefit, in whole or
in part, of the Operating Company or its customers; and
(d) No transfer of the license(s) to an unaffiliated
party may occur without the written consent of the Operating
Company, such consent not to be unreasonably withheld.
Accordingly, any existing communications facilities may in
the future be transferred to Communications from other affiliated
companies or leased to Communications by other affiliated
companies and we ask that the Commission reserve jurisdiction
with respect thereto. All such transactions will be conducted at
cost in compliance with Rules 90 and 91. Provision of any
incidental services by the Operating Companies to Communications
or by Communications to the Operating Companies will be charged
on the basis of "at cost" in compliance with Rules 87, 90 and 91.
34<PAGE>
While the wireless telecommunications services will be sold
by Communications to affiliates at the lower of cost or market in
order to give Operating Companies the benefits of scale
economies, a wide variety of routine and incidental transactions
occur between affiliates such as when an employee of one company
performs services for another for a temporary period of time,
where facilities or offices are shared, a company vehicle is
loaned, etc. These will be billed "at cost".
Various Southern affiliates are parties to a previously
approved "Southern Electric System Telecommunications Network
Agreement" dated as of October 1, 1985. This Agreement provides
"at cost" arrangements for telecommunications use of facilities.
Communications will be added as a party and the agreement will
govern, to the extent applicable. The Agreement is attached as
Exhibit C.
1.4 Benefits of a Communications Subsidiary.
Southern believes that the creation and maintenance of a
system communications subsidiary will provide cost efficiencies,
economies of scale and other efficiencies, in that it will:
35<PAGE>
- facilitate the design and development of all
communications services on a system-wide
basis, leading to greater standardization of
equipment, the elimination of redundant and
incompatible capabilities, pooling of
substantial telecommunications expertise and
experience among system employees, and
greater operating efficiencies;
- facilitate the financing of these facilities
by, among other things, enabling Southern to
centralize purchases and to access sources of
capital (including vendor financing) better
suited to communications equipment, as well
as enable Southern system companies to avoid
restrictive mortgage covenants;
- simplify accounting and other administrative
functions;
- facilitate quicker and more orderly
restorations of electric service following
storm-related outages and other disturbances
in Southern's service area; and
- enhance Southern's ability to assist the
Operating Companies, interconnected
utilities, industrial and wholesale
customers, and governmental public safety and
emergency management agencies following
storm-related outages and other disturbances.
36<PAGE>
- Provide in the most economical fashion the internal
telecommunications needs on an integrated basis of
Southern for operations and customer service.
Ultimately, Southern contemplates that Communications will
be staffed on a full-time basis by communications engineers and
other specialists in the communications field who are now
employed elsewhere in the Southern system and by persons hired
specifically for this purpose. Initially, a small management
staff of approximately five (5) to ten (10) persons will be
transferred to Communications from Services. In addition,
approximately 25 engineering, technical and marketing employees
will be transferred. It is contemplated that Services will
provide financial, accounting, data processing, and internal
auditing services to Communications in accordance with the
methods and accounts previously approved by this Commission. In
addition, pending the full development of Communications' work
force, personnel from the Operating Companies and Southern
Development and Investment Group5 will provide necessary
services to Communications on a full cost reimbursement basis
utilizing a work order procedure.
- --------------
5 Southern Development and Investment Group conducts
research and related activities with respect to remote meter-
reading, energy management and efficiency services and
communications technologies, and may render a small amount of
assistance from time to time by making its expertise available to
Communications.
37<PAGE>
1.5 Investments in Communications.
Southern contemplates that Communications' business will be
financed with equity investments by Southern, capital advances by
Southern and loans obtained from Southern or external sources,
including vendor financing, if available. Initially, Southern
proposes to invest up to $179,000,000 from time to time through
December 31, 1998, for purchases of Communications' capital
stock, loans and capital contributions to Communications, or
guarantees of obligations of Communications, or any combination
thereof. Southern believes that this amount is sufficient to
finance Communications' operations through the frequency
licensing and/or acquisition process, the completion of the
design of the system and evaluation of equipment, and the
construction of facilities and purchase of equipment in
connection with the mobile radio system. This amount includes
the cost of a two year operations and maintenance contract by the
system's vendor.
Investments in Communications will be made by Southern
utilizing any combination of internally generated funds (chiefly
dividends from subsidiaries), borrowings under its short term
debt/commercial paper program (File No. 70-8309, HCAR 26004,
March 15, 1994) and proceeds of common stock sales currently
authorized (File Nos. 70-8435, HCAR 26098, August 5, 1994, and
70-8277, HCAR 25979, January 25, 1994), together with the
proceeds of such other securities as Southern is hereafter
authorized to sell (to the extent so authorized).
38<PAGE>
To the extent capital contributions involve loans from
Southern, such loans will be made from time to time prior to
September 30, 1998 with maturities no later than September 30,
2003, and evidenced by a note, the form of which is attached as
Exhibit "E". They will bear an interest rate equal to Southern's
comparable cost of capital6 or, if no such comparability exists,
a rate not to exceed the greater of the prime rate in effect on
the date of the loan at a bank designated by Southern plus three
(3%) percent. To the extent loans are made by third parties
within the overall $179 million capitalization of Communications
(other than credit extended by equipment vendors), such loans
will be evidenced by notes issued by Communications and will have
a term of from 5 to 20 years, with an interest rate not to exceed
the greater of the prime rate of interest plus three percentage
points per annum, or 12 percent per annum. Such loans may be
guaranteed by Southern. The interest rates stated above are
reasonable and consistent with expected rates giving due
consideration to conditions and expected terms.
The proportion of debt to equity has not as yet been
determined and is subject to further analysis, but current belief
is that Communications will be initially capitalized with
approximately 50% debt and 50% equity.
- --------------
6 Southern's cost of equity capital is 13.9% now
approximately and overall cost is 10.6% based on 45% equity, 10%
preferred and 45% debt.
39<PAGE>
The cost of equity capital will be determined in accordance
with the Capital Asset Pricing Model ("CAPM"). The equation for
CAPM is:
KL = RF + [B x MRP]
where K = Required cost of equity
RF = Risk free cost of debt (30 yr. Treasury
Bills)
B = Company risk relative to the market (beta
coefficient)
MRP = Market risk premium
The premise of this widely accepted method is that the risk
premium for a company's equity investment over a risk free rate
may be calculated by multiplying the risk premium of the market
by a company specific beta coefficient. The beta coefficient is
a measure of the relative risk of the company to the risk of the
market. The resulting risk premium indicates that appropriate
return that a company's common equity investor must receive in
order to be adequately compensated at a level which is
commensurate with the relative risk of the investment.
Using cellular companies to value risk (beta) (Nextel,
Contel, Vanguard Cellular, U.S. West) and taking into account
start-up company risk, the formula would result in a higher cost
of capital than that of Southern, which is appropriate since
there is no regulated rate of return assurance. However, during
the first three years, to the extent Southern provides equity,
Communications will use Southern's beta coefficient factor since
it is anticipated that Southern's affiliates will be the primary
40<PAGE>
users. Thereafter, the beta coefficient will be the company risk
of Communications based upon comparable cellular phone
companies.
The cost of equity capital is important for computation of
affiliate transaction charges, but only when those charges and
costs result in prices to the Operating Companies which are below
market.
1.6 Accounting and Allocations
Southern Communications will maintain separate books and
records as described below. Southern Communications accounting
support, including financial reporting, general ledger, tax,
treasury, accounts payable, payroll and plant accounting will be
provided by Southern Company Services. Financial transactions,
books and records for Southern Communications will be kept
completely separate and independent from those of SCS or the
Operating Companies. Southern Communications will be billed
monthly, at cost, for all accounting services rendered by SCS in
accordance with the established procedures of the Service
Company.
Southern Communications general ledger accounting package
will be "Oracle Financials" (described in Exhibit "D-1") which is
used to provide financial reports and certain other management
reports. Communications will utilize the Oracle modules of
general ledger, fixed assets, accounts payable, accounts
receivable, inventory and order entry.
Southern Communications chart of accounts is derived by
using the SEC Uniform System of Accounts. Revenues and expenses
41<PAGE>
will be categorized by state sales regions, with each region's
revenues classified as either affiliated or non-affiliated
revenues.
Accounts payable: Accounts payable activities include
ordering, receiving, inspecting, approving and paying for goods
and services and the related accounting for these transactions.
Accounts payable transactions are recorded upon receipt of
approved invoices or employee expense statements into the
accounts payable Oracle system, which is updated to the general
ledger system each month.
Revenue and Billing: Billings to affiliate and non-
affiliate companies will be generated by a separate billing
system, specifically designed for the communications industry,
including specialized mobile radio. The billing system will be
interfaced with Oracle general ledger in order to appropriately
account for the revenues and corresponding receivables.
Payroll: Payroll activities include authorizing wages and
deductions, approving time sheets, recording payroll liability,
approving payment, disbursing payroll funds and the related
accounting for these transactions including accurate and timely
postings of amounts to employee accounts and work orders and
proper preparation of journal entries to record the payroll
disbursement each month.
Treasury: Treasury activities include the proper processing
and recording of cash receipts and cash disbursements, making
wire transfers in settlement of obligations and determining
excess cash on hand to invest in short-term instruments.
42<PAGE>
Plant Accounting: Plant activities include the purchasing
and accounting for fixed assets. All accounting, including
depreciation and property tax accounting, is computed and
recorded in the Oracle fixed asset subsystem.
Operational Reports: Every month company financial
statements and income statements by state sales region will be
generated by the Oracle accounting system. Other reports
generated that will be used by management would include: budget
vs. actual reporting for company and all departments; cash flow;
inventory reports to assist in forecasting and managing inventory
levels; local vs. long distance calls; services utilized (i.e.,
call forwarding, call waiting, etc.); and affiliate vs. non-
affiliate revenue (sales).
Revenues will be identified by source, i.e., affiliated and
non-affiliated. Expenses will be classified as relating
specifically to either affiliated or non-affiliated customers, or
common costs. Expenses believed to be associated with a feature,
service or facility which is unique to a specific class of
customers will be classified as relating specifically to that
class of customers. At the end of each six-month accounting
period, these unique expenses will be analyzed to determine
whether all or any portion of such unique expenses should be
allocated to additional classes of customers based upon their
needs and usage patterns.7 Common costs will be allocated
7 As an example, a remote meter-reading system may be
designed for the use of the Operating Companies and would be
considered as unique to them unless and until such time as some
non-affiliated user also makes use of those features.
43<PAGE>
between the two customer classifications based on a reasonable
and equitable allocation basis as described generally in Exhibit
"D".
The cost of equity capital will be determined by use of CAPM
previously described in Item 1.5 and will be proportionately
borne by all customers in accordance with the applicable
allocations set forth in Exhibit "D". However, it is emphasized
that cost of capital (equity or debt) does not affect prices
charged to the Operating Companies unless they are charged below
market prices.
1.7 Reporting Requirements
Southern Communications will be required to file periodic
reports with the Commission as follows:
1. Southern Communications will file with the Commission,
not later than 60 days after the end of each first six month
accounting period and not later than April 1 of the year
following the end of its fiscal year:
a. A copy of Southern Communications balance sheet,
income statement and statement of cash flow; and
b. A schedule of reported revenues and expenses.
Revenues will be identified by source, i.e., affiliated and
non-affiliated. Expenses will be classified as relating
specifically to either affiliated or non-affiliated
customers, or common costs. Expenses believed to be
associated with a feature, service or facility which is
unique to a specific class of customers will be classified
as relating specifically to that class of customers.
44<PAGE>
2. In addition, Southern Communications will file, no
later than May 1 after the end of its fiscal year, a form U-13-60
(as modified).
3. Southern Communications will file quarterly reports, 45
days after the end of each of its first three fiscal quarters and
on or before April 1 after the end of its fourth fiscal quarter
containing:
a. A statement of revenues, distinguishing and
setting forth non-affiliate revenues and revenues derived
from each affiliate company;
b. The prices charged to affiliates for each type of
service rendered to affiliates;
c. A statement as to whether the prices charged to
affiliates were based upon market or cost; and
d. An explanation of how the market or cost pricing
utilized was derived.
4. Communications shall file with the Commission no later
than 45 days after the end of its first six month accounting
period and no later than April 1 following the end of its second
six month accounting period showing the following:
a. The actual calculation used to calculate costs;
b. An explanation of how costs were allocated;
c. A description of the rationale and methodology
employed in determining allocations of cost;
d. A categorical (affiliate vs. non-affiliate)
analysis of corporate costs (1) depreciation, (2) outside
services, (3) labor costs, (4) administrative and general
45<PAGE>
expenses, (5) cost of capital, (6) costs of goods and
materials, and (7) other costs) including an analysis of
direct costs and common costs; and
e. An analysis of cost versus market pricing,
comparing market pricing for affiliates to system-wide costs
for affiliates and showing the basis for allocations to the
affiliates. The foregoing information may be included in
the report furnished pursuant to 1(b) above.
Communications may designate proprietary, privileged, trade
secret and competitively sensitive information contained in the
foregoing reports as Confidential Under Rule 104.
1.8 Discussion
Communications seeks to serve the affiliated Southern
electric system subsidiaries and those segments of the public who
are truly "reasonably incidental, or economically necessary or
appropriate" to its business. As is illustrated by the Federal
Power Commission's 1970 National Power Survey and the
administration of the integration standards of the Act,
integrated and coordinated utility operations inherently require
substantial investment in communications infrastructure. The
need to have a state-of-the-art system that will support voice
and new data applications is also apparent from the explosive
growth of applications involving energy management, real-time
pricing and coordination of utility and customer resources,
utility service needs that have grown greatly following the
enactment of the Public Utility Regulatory Policies Act of 1978,
which encouraged customer generation, marginal cost pricing, and
46<PAGE>
time-of-use pricing. Southern's undertaking to create a modern
wireless system to support its needs is also driven by its
specific need to replace and integrate its existing fragmented
system. This application therefore does not represent entry by
Southern into a new business line. The capital requirements of a
modern, integrated system that will support emerging utility data
and voice applications, however, dictate that Southern should
maximize the use of its system through spreading its
infrastructure cost by providing services to communications
customers whose needs are similar to those of Southern. As
discussed above, serving these customers and sharing its system
with those customers does not entail mass market personal
communications. This customer base itself is one which is
"reasonably incidental, or economically necessary or appropriate"
to Southern's business.
Some have wondered whether the entry of utilities into
telecommunications comports with PUHCA, either as written or
implemented. Representative Edward Markey has written letters to
the Commission and to others, including Southern. Our response
to Representative Markey is attached as Exhibit B-3. Succinctly,
we believe that the real question at hand is not whether electric
utilities are in the business of telecommunications, but how they
can most efficiently use their communications assets and can most
efficiently meet their needs. Consumers will benefit from less
regulation and more competition whether it results from
administrative or Congressional action, or a combination thereof.
47<PAGE>
Dial Page has submitted late-filed comments in an effort to
preserve its monopoly position in Atlanta, even while pursuing
its sale to Nextel. These comments are from a non-party, having
no real economic interest herein recognizable under PUHCA, who
seeks to use PUHCA for its own ends -- monopoly preservation.
Our earlier responses to Dial Page are set forth in Exhibit B-4.
More to the point, the amended U-1 adequately covers all material
questions raised and there are no material facts determinative of
the issues in this proceeding which necessitate a hearing.
Governmental Entities. The integration of public emergency
response is a common sense goal reasonably tied to the electric
utility business. Fire, police and other agencies interface with
power companies daily with respect to automobile accidents
affecting utility poles, fires, downed power lines, storms,
accidents and other public emergencies. Being on a common system
materially enhances the ability of the utility to do its job in
serving its customers and maintaining and restoring service. It
cannot be expected that governmental agencies and entities would
participate in an integrated and coordinated wireless
communication system of the type described in this filing solely
for the purpose of communicating with the Southern electric
system and operating a different system for communicating with
others. Such an approach would require that governmental
vehicles be equipped with two radios rather than one and would
double the investment required for governments rather than
reducing the cost which will be the impact of the scale economies
realized by the proposed system. Moreover, most, if not all, of
48<PAGE>
the governmental agencies and entities proposed to be served will
actually own their own frequencies and will merely integrate
these frequencies into the Southern system and contribute towards
the cost of the overall system. Their frequencies will be
partitioned to their own governmental uses which will include
close communication with the utility involved but which cannot
exclude internal government communications or communications by
the government with others.
Interconnected Utilities. This is another class of proposed
customer which clearly meets on its face the "reasonably
incidental or economically necessary or appropriate" test. In
Georgia, as an example, Georgia Power is part owner of an
integrated transmission system serving over ninety municipalities
and rural electric cooperatives in Georgia. There is daily and
hourly need for communication between utilities, and the use of a
common communications system clearly facilitates this
communication. Nevertheless, an interconnected utility cannot be
expected to invest in the cost of units and services which enable
it merely to communicate with Georgia Power, as an example, and
not communicate internally or with the outside world. Again,
many of these interconnected utilities have their own frequencies
and some now participate in common ownership of
telecommunications assets at the operating company level.
Utility Customers. The right, duty and need of a utility to
install and operate modalities which permit communication between
the utility and its customers is self-evident. Use of the
proposed system in this context will be multi-faceted. Power
49<PAGE>
usage monitoring, including automated meter reading, energy
management applications, power outage observation, and a host of
future data applications, all have a large actual and potential
role in future use of the proposed system. Many large industrial
and commercial accounts, such as other "right-of-way" companies,
will be tied into the proposed system in virtually the same
manner as governmental entities, and will have similar needs and
requirements. Paper and forest products companies will have the
ability to notify the utilities as to downed power lines in the
forest lands which they own on a much more expedited basis
through use of the proposed system. Industrial and commercial
accounts would be integrated in the proposed system so as to
permit use of the system for communication of time of use pricing
information, service restoration coordination and many other
utility related applications. It is anticipated that about half
of industrial and commercial concerns using the system will
integrate their own frequencies into the overall system and allow
Southern to operate and maintain the overall system with their
frequencies virtually dedicated to their own uses. Of course,
they would be reluctant to participate in such a system if they
had to maintain still another communication system for talking
with others when this system is fully capable of meeting their
mobile radio communications needs. Moreover, they would be
unwilling to integrate their frequencies into the proposed system
if by doing so they were then deprived of the use of those
frequencies for internal communications or other necessary
50<PAGE>
business communications of the commercial or industrial customer.
The installation of a wireless digital communications system
is part of the communications revolution for the 21st century.
As Vice-President Gore observed in his remarks delivered at Royce
Hall, U.C.L.A., Los Angeles, California January 11, 1994:
"I join you to outline not only this
Administration's vision of the national
information infrastructure, but our proposals
for creating it.
* * *
We've all become used to stumbling over
cliches in our efforts to describe the
enormity of change now under way and the
incredible speed with which it is taking
place. Often we call it a revolution -- the
digital revolution.
* * *
To take one example of what competition
means, cable companies, long distance
companies and electric utilities must be free
to offer two-way communications and local
telephone service.
* * *
Preserving the free flow of information
requires open access, our third basic
principle.
How can you sell your ideas, your
information, your programs, if an
intermediary who is also your competitor has
the means to unfairly block your access to
customers? We can't subject the free flow of
content to artificial constraints at the
hands of either government regulators or
would-be monopolists.
51<PAGE>
We must also guard against unreasonable
technical obstacles.
* * *
Accordingly, our legislative package will
contain provisions designed to ensure that
each telephone carrier's network will be
readily accessible to other users. We will
create an affirmative obligation to
interconnect and to afford non-discriminatory
access to network facilities, services,
functions and information. We must explore
the future of non-commercial broadcasting;
there must be public access to the
information superhighway.
These measures will preserve the future
within the context of our present regulatory
structures. But that is not enough. We must
move towards a regulatory approach that
encourages investment, promotes competition
and secures open access. And one that is not
just a patch-work quilt of old approaches,
but an approach necessary to promote fair
competition in the future.
* * *
As different services are grouped within a
single corporate structure, we must ensure
that these new, combined entities are not
caught in a cross-fire of conflicting and
duplicative regulatory burdensome standards.
This Administration will not let existing
regulatory structures impede or distort the
evolution of the communications industry.
In the information marketplace of the future,
we will obtain our goals of investment,
competition and open access only if
regulation matches the marketplace. That
requires a flexible, adaptable regulatory
regime that encourages the widespread
provision of broad band, interactive digital
services."
The "reasonably incidental, or economically necessary or
appropriate" tests of the Act should facilitate the deployment of
wireless digital communications by electric utilities because
communications functions are critical to integrated utility
52<PAGE>
operations and efficient utility customer service. Such an
approach is fully consistent with the position of the Clinton
Administration and the policy enunciated by the Vice-President.
On the other hand, restrictions on the use of the proposed
communications system which impede Southern's ability to
communicate with governmental entities, interconnected utilities
and utility customers, or which have the effect of prohibiting
those classes from utilizing such a communications network for
their communications needs, is inconsistent, not only with the
requirements of economical integrated and coordinated electric
utility operations, but also with the limits on government
regulation imposed by the First Amendment as is illustrated by
the recent decision holding unconstitutional the common carrier
quarantine provisions of the Cable Communications Policy Act of
1984. The Chesapeake & Potomac Telephone Company of Virginia v.
United States, 830 F. Supp. 909 (E.D. Va. 1993).
Item 2. Fees, Commission and Expenses.
Fees, commissions and expenses expected to be incurred by
Communications in connection with the Application are as follows:
Holding Company Act filing fee $ 2,000
Counsel fees:
Troutman Sanders $40,000*
Miscellaneous and incidental expenses $15,000*
*Estimated amount
Total $57,000
53<PAGE>
Item 2. Applicable Statutory Provisions.
Applicable Statutory
Transaction Provisions or Rules
Acquisition by Southern of Sections 9(a)(1)
shares of Communications and 10
Issuance by Communications of Sections 6(a) and 7
capital stock to Southern and
Notes to Third Party Lenders
Capital contributions by Southern Section 12(b);
to Communications and guaranties Rule 45
by Southern of Communications'
obligations
Transfer by Operating Companies Section 13(b); Rules 90
to Communications of existing and 91
communications equipment
Business transactions between Section 13; Rules 81,
Communications and affiliated 87, 90, 91, 93 and 94
public utility companies
Performance of services Section 13(b); Rule
by Operating Companies to 87(a)(3) and (b)
Communications
Sale of Communications Sections 9(a)(1) and 10
Services to Non-Affiliates
of Southern
Item 3. Regulatory Approval.
The Federal Communications Commission ("FCC") has regulatory
jurisdiction over mobile radio systems operated by the Operating
Companies and their affiliates. With the possible exception of
the Federal Aviation Administration, which may need to approve
construction of towers over permitted heights, no federal agency
other than the Commission and the FCC has jurisdiction over the
proposed transactions. No state commission has jurisdiction over
the proposed transactions, except to the extent transfer of
54<PAGE>
utility assets may be deemed by them to occur. All state
commissions having regulatory jurisdiction over the Southern
Electric system have been advised of this matter and all such
commissions have received or are in the process of receiving a
copy of this amended filing.
Item 4. Procedure.
Southern requests that the Commission's order be issued as
soon as the rules allow, and that there be no thirty-day waiting
period between the issuance of the Commission's order and the
date on which it is to become effective. Southern hereby waives
a recommended decision by a hearing officer or other responsible
officer of the Commission and hereby consents that the Division
of Investment Management may assist in the preparation of the
Commission's decision and/or order in this matter unless such
Division opposes the matters covered hereby.
Southern agrees that the Commission's order issued in
connection with this filing shall be subject to the terms and
conditions prescribed in Rule 24 promulgated under the Act.
Item 5. Exhibits and Financial Statements.
(a) Exhibits.
A-1 - Proposed Articles of Incorporation of
Southern Communications Services, Inc.
A-2 - Proposed Bylaws of Southern Communications
Services, Inc.
B - Proposed form of communications services
agreement between Southern Communications
Services, Inc. and other subsidiaries of The
Southern Company.
55<PAGE>
B-1 - Tower Location Map ("P")
B-2A - Mobile Radio Business Plan (Previously filed
in amendment No. 2 as Exhibit H.)
B-2B - Mobile Radio Business Plan Updated Pro-Formas
(Confidential Rule 104 submission)
B-3 - Response to Representative Markey (Previously
filed in Amendment No. 2 as Exhibit H.)
B-4 - Responses to Dial Page (Previously filed in
Amendment No. 2 as Exhibit H.)
C - Existing Southern Electric System
Telecommunications Network Agreement.
(Previously filed in Amendment No. 1 as
Exhibit H.)
D - Description of Accounting and Allocation
Procedures. ("P")
D-1 - Accounting Information System. ("P")
E - Form of Note.
F - Opinion of Troutman Sanders. (To be filed by
amendment.)
G - Form of Notice.
(b) Financial Statements.
- Balance sheets of The Southern Company,
corporate and consolidated, and Southern
Company Communications, Inc., giving effect
to the transaction contemplated herein (To be
filed by amendment).
Item 6. Information as to Environmental Effects.
(a) In light of the transactions proposed in this
application and declaration, as described in Item 1 hereof, the
Commission's action in this matter will not constitute any major
federal action significantly affecting the quality of the human
environment.
56<PAGE>
(b) No other federal agency has prepared or is preparing an
environmental impact statement with regard to the proposed
transactions.
57<PAGE>
SIGNATURE
Pursuant to the requirements of the Public Utility Holding
Company Act of 1935, the undersigned companies have duly caused
this statement to be signed on their behalf by the undersigned
thereunto duly authorized.
Dated: December 16, 1994.
THE SOUTHERN COMPANY
By: /s/Tommy Chisholm
Tommy Chisholm, Secretary
SOUTHERN COMPANY COMMUNICATIONS, INC.
By: /s/Tommy Chisholm
Tommy Chisholm, Secretary
58<PAGE>
EXHIBIT A-1
CERTIFICATE OF INCORPORATION
OF
SOUTHERN COMMUNICATIONS SERVICES, INC.
I.
The name of the corporation is SOUTHERN COMMUNICATIONS
SERVICES, INC. (the "Corporation").
II.
The initial registered office of the Corporation in the
State of Delaware shall be located at Corporation Trust Center,
1209 Orange Street, Wilmington, New Castle County, Delaware
19801. The initial registered agent of the Corporation at such
address shall be The Corporation Trust Company.
III.
The purpose or purposes for which the Corporation is
organized is to directly or indirectly engage in the business of
providing communication services; to engage in any form or type
of business for any lawful purpose or purposes not specifically
prohibited to corporations for profit under the laws of the State
of Delaware; and to have all the rights, powers, privileges and
immunities which are now or hereafter may be allowed to
corporations under the laws of the State of Delaware.
IV.
The Corporation shall be authorized to issue One Thousand
(1,000) shares of One Dollar ($1.00) par value capital stock, all
of which shall be designated "Common Stock." The shares of
Common Stock shall have unlimited voting rights and shall be
entitled to receive all of the net assets of the Corporation upon
dissolution or liquidation.
V.
The Corporation shall have perpetual duration.
<PAGE>
VI.
The Board of Directors of the Corporation shall have the
power to adopt, amend and repeal the By-Laws of the Corporation.
VII.
To the fullest extent that the General Corporation Law of
Delaware, as it exists on the date hereof or as it may hereafter
be amended, permits the limitation or elimination of the
liability of directors, no director of the Corporation shall be
personally liable to the Corporation or its stockholders for
monetary damages for breach of duty of care or other duty as a
director. No amendment to or repeal of this Article shall apply
to or have any effect on the liability or alleged liability of
any director of the Corporation for or with respect to any acts
or omissions of such director occurring prior to such amendment
or repeal.
VIII.
The name and address of the Incorporator of the Corporation
is Alan E. Serby, Esquire, NationsBank Plaza, 600 Peachtree
Street, N.E., Suite 5200, Atlanta, Georgia 30308-2216.
/s/Alan E. Serby
Alan E. Serby, Esquire, Incorporator
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<PAGE>
EXHIBIT A-2
SOUTHERN COMMUNICATIONS SERVICES, INC.
* * * * *
B Y L A W S
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of
Wilmington, County of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such
other places both within and without the State of Delaware as the
board of directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the
election of directors shall be held at such place as may be fixed
from time to time by the board of directors, or at such other
place either within or without the State of Delaware as shall be
designated from time to time by the board of directors and stated
in the notice of the meeting. Meetings of stockholders for any
other purpose may be held at such time and place, within or
without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held at
such date and time as shall be designated from time to time by
the board of directors and stated in the notice of the meeting,
at which they shall elect by a plurality vote a board of
directors, and transact such other business as may properly be
brought before the meeting.
<PAGE>
Section 3. Written notice of the annual meeting stating the
place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting not less than ten
(10) nor more than sixty (60) days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger
of the corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of each
stockholder. Such list shall be open to the examination of any
stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any
purpose or purposes, unless otherwise prescribed by statute or by
the certificate of incorporation, may be called by the president
and shall be called by the president or secretary at the request
in writing of a majority of the board of directors, or at the
request in writing of stockholders owning a majority in amount of
the entire capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
Section 6. Written notice of a special meeting stating the
place, date and hour of the meeting and the purpose or purposes
for which the meeting is called, shall be given not less than ten
(10) nor more than sixty (60) days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of
stockholders shall be limited to the purposes stated in the
notice.
Section 8. The holders of a majority of the stock issued
and outstanding and entitled to vote thereat, present in person
or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business
except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or
represented at any meeting of the stockholders, the stockholders
entitled to vote thereat, present in person or represented by
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<PAGE>
proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a
quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any
business may be transacted which might have been transacted at
the meeting as originally notified. If the adjournment is for
more than thirty days, or if after the adjournment a new record
date is fixed for the adjourned meeting, a notice of the
adjourned meeting shall be given to each stockholder of record
entitled to vote at the meeting.
Section 9. When a quorum is present at any meeting, the
vote of the holders of a majority of the stock having voting
power present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one
upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in
which case such express provision shall govern and control the
decision of such question.
Section 10. Unless otherwise provided in the certificate of
incorporation or in an agreement among shareholders as permitted
under the General Corporation Law of the State of Delaware (the
"Delaware Corporation Law"), each stockholder shall at every
meeting of the stockholders be entitled to one vote in person or
by proxy for each share of the capital stock having voting power
held by such stockholder, but no proxy shall be voted on after
three years from its date, unless the proxy provides for a longer
period.
Section 11. Unless otherwise provided in the certificate of
incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth
the action so taken, shall be signed by the holders of
outstanding stock having not less than the minimum number of
votes that would be necessary to authorize or take such action at
a meeting at which all shares entitled to vote thereon were
present and voted. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent
shall be given to those stockholders who have not consented in
writing.
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<PAGE>
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute
the whole board shall be not less than three (3) nor more than
seven (7). The initial board shall consist of six (6) directors.
Thereafter, within the limits above specified, the number of
directors shall be determined by resolution of the board of
directors or by the stockholders at the annual meeting. The
directors shall be elected at the annual meeting of the
stockholders, except as provided in Section 2 of this Article,
and each director elected shall hold office until his successor
is elected and qualified. Directors need not be stockholders.
Section 2. Vacancies and newly created directorships
resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office,
though less than a quorum, or by a sole remaining director, and
the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall
qualify, unless sooner displaced. If there are no directors in
office, then an election of directors may be held in the manner
provided by statute. If, at the time of filling any vacancy or
any newly created directorship, the directors then in office
shall constitute less than a majority of the whole board (as
constituted immediately prior to any such increase), the Court of
Chancery may, upon application of any stockholder or stockholders
holding at least ten percent of the total number of the shares at
the time outstanding having the right to vote for such directors,
summarily order an election to be held to fill any such vacancies
or newly created directorships, or to replace the directors
chosen by the directors then in office.
Section 3. The business of the corporation shall be managed
by or under the direction of its board of directors which may
exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the
certificate of incorporation or by these by-laws directed or
required to be exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may
hold meetings, both regular and special, either within or without
the State of Delaware.
Section 5. The first meeting of each newly elected board of
directors shall be held at such time and place as shall be fixed
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<PAGE>
by the vote of the stockholders at the annual meeting and no
notice of such meeting shall be necessary to the newly elected
directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of
the newly elected board of directors, or in the event such
meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be
specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may
be held without notice at such time and at such place as shall
from time to time be determined by the board.
Section 7. Special meetings of the board may be called by
the president on 2 days' notice to each director, either
personally or by mail or by telegram; special meetings shall be
called by the president or secretary in like manner and on like
notice on the written request of two directors unless the board
consists of only one director; in which case special meetings
shall be called by the president or secretary in like manner and
on like notice on the written request of the sole director.
Section 8. At all meetings of the board a majority of the
directors shall constitute a quorum for the transaction of
business and the act of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the
board of directors, except as may be otherwise specifically
provided by statute or by the certificate of incorporation. If a
quorum shall not be present at any meeting of the board of
directors the directors present thereat may adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate
of incorporation or these by-laws, any action required or
permitted to be taken at any meeting of the board of directors or
of any committee thereof may be taken without a meeting, if all
members of the board or committee, as the case may be, consent
thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the board or committee.
Section 10. Unless otherwise restricted by the certificate
of incorporation or these by-laws, members of the board of
directors, or any committee designated by the board of directors,
may participate in a meeting of the board of directors, or any
committee, by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other, and such
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<PAGE>
participation in a meeting shall constitute presence in person at
the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution
passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the
directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the
committee.
Any such committee, to the extent provided in the resolution
of the board of directors, shall have and may exercise all the
powers and authority of the board of directors in the management
of the business and affairs of the corporation, and may authorize
the seal of the corporation to be affixed to all papers which may
require it; but no such committee shall have the power or
authority in reference to amending the certificate of
incorporation, adopting an agreement of merger or consolidation,
recommending to the stockholders the sale, lease or exchange of
all or substantially all of the corporation's property and
assets, recommending to the stockholders a dissolution of the
corporation or a revocation of a dissolution, or amending the
by-laws of the corporation; and, unless the resolution or the
certificate of incorporation expressly so provide, no such
committee shall have the power or authority to declare a dividend
or to authorize the issuance of stock or to adopt a certificate
of ownership and merger. Such committee or committees shall have
such name or names as may be determined from time to time by
resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of
its meetings and report the same to the board of directors when
required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate
of incorporation or these by-laws, the board of directors shall
have the authority to fix the compensation of directors. The
directors may be paid their expenses, if any, of attendance at
each meeting of the board of directors and may be paid a fixed
sum for attendance at each meeting of the board of directors or a
stated salary as director. No such payment shall preclude any
director from serving the corporation in any other capacity and
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<PAGE>
receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending
committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate
of incorporation or by law, any director of the entire board of
directors may be removed, with or without cause, by the holders
of a majority of shares entitled to vote at an election of
directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes
or of the certificate of incorporation or of these by-laws,
notice is required to be given to any director or stockholder, it
shall not be construed to mean personal notice, but such notice
may be given in writing, by mail, addressed to such director or
stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be
deposited in the United States mail. Notice to directors may
also be given by telegram.
Section 2. Whenever any notice is required to be given
under the provisions of the statutes or of the certificate of
incorporation or of these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen
by the board of directors and shall be at a minimum a president,
secretary and treasurer. The board of directors may also choose
one or more vice-presidents, assistant secretaries and assistant
treasurers. Any number of offices may be held by the same
person, unless the certificate of incorporation or these by-laws
otherwise provide.
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Section 2. The board of directors at its first meeting
after each annual meeting of stockholders shall choose a
president, one or more vice-presidents, a secretary and a
treasurer.
Section 3. The board of directors may appoint such other
officers and agents as it shall deem necessary who shall hold
their offices for such terms and shall exercise such powers and
perform such duties as shall be determined from time to time by
the board.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the board of directors.
Section 5. The officers of the corporation shall hold
office until their successors are chosen and qualify. Any
officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the
board of directors. Any vacancy occurring in any office of the
corporation shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive
officer of the corporation, shall preside at all meetings of the
stockholders and the board of directors, shall have general and
active management of the business of the corporation and shall
see that all orders and resolutions of the board of directors are
carried into effect.
Section 7. The president shall execute bonds, mortgages and
other contracts requiring a seal, under the seal of the
corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of
directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event
of his inability or refusal to act, the vice-president (or in the
event there be more than one vice-president, the vice-presidents
in the order designated by the directors, or in the absence of
any designation, then in the order of their election) shall
perform the duties of the president, and when so acting, shall
have all the powers of and be subject to all the restrictions
upon the president. The vice-presidents shall perform such other
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duties and have such other powers as the board of directors may
from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the
board of directors and all meetings of the stockholders and
record all the proceedings of the meetings of the corporation and
of the board of directors in a book to be kept for that purpose
and shall perform like duties for the standing committees when
required. He shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of
directors, and shall perform such other duties as may be
prescribed by the board of directors or president, under whose
supervision he shall be. He shall have custody of the corporate
seal of the corporation and he, or an assistant secretary, shall
have authority to affix the same to any instrument requiring it
and when so affixed, it may be attested by his signature or by
the signature of such assistant secretary. The board of
directors may give general authority to any other officer to
affix the seal of the corporation and to attest the affixing by
his signature.
Section 10. The assistant secretary, or if there be more
than one, the assistant secretaries in the order determined by
the board of directors (or if there be no such determination,
then in the order of their election) shall, in the absence of the
secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and
shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the
corporation and shall deposit all moneys and other valuable
effects in the name and to the credit of the corporation in such
depositories as may be designated by the board of directors.
Section 12. The treasurer shall disburse the funds of the
corporation as may be ordered by the board of directors, taking
proper vouchers for such disbursements, and shall render to the
president and the board of directors, at its regular meetings, or
when the board of directors so requires, an account of all his
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transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall
give the corporation a bond (which shall be renewed every six
years) in such sum and with such surety or sureties as shall be
satisfactory to the board of directors for the faithful
performance of the duties of his office and for the restoration
to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and
other property of whatever kind in his possession or under his
control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be
more than one, the assistant treasurers in the order determined
by the board of directors (or if there be no such determination,
then in the order of their election) shall, in the absence of the
treasurer or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be
represented by a certificate or shall be uncertificated.
Certificates shall be signed by, or in the name of the
corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president and the treasurer
or an assistant treasurer, or the secretary or an assistant
secretary of the corporation.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the
registered owner thereof a written notice containing the
information required to be set forth or stated on certificates
pursuant to the Delaware Corporate Law Sections 151, 156, 202(a)
or 218(a) or a statement that the corporation will furnish
without charge to each stockholder who so requests the powers,
designations, preferences and relative participating, optional or
other special rights of each class of stock or series thereof and
the qualifications, limitations or restrictions of such
preferences and/or rights.
Section 2. Any of or all the signatures on a certificate
may be facsimile. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been
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placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he
were such officer, transfer agent or registrar at the date of
issue.
LOST CERTIFICATES
Section 3. The board of directors may direct a new
certificate or certificates or uncertificated shares to be issued
in place of any certificate or certificates theretofore issued by
the corporation alleged to have been lost, stolen or destroyed,
upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or
destroyed. When authorizing such issue of a new certificate or
certificates or uncertificated shares, the board of directors
may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall
require and/or to give the corporation a bond in such sum as it
may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the
transfer agent of the corporation of a certificate for shares
duly endorsed or accompanied by proper evidence of succession,
assignation or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction
upon its books. Upon receipt of proper transfer instructions
from the registered owner of uncertificated shares such
uncertificated shares shall be cancelled and issuance of new
equivalent uncertificated shares or certificated shares shall be
made to the person entitled thereto and the transaction shall be
recorded upon the books of the corporation.
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FIXING RECORD DATE
Section 5. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of
stockholders or any adjournment thereof, or to express consent to
corporate action in writing without a meeting, or entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the board of directors may
fix, in advance, a record date, which shall not be more than
sixty (60) nor less than ten (10) days before the date of such
meeting, nor more than sixty (60) days prior to any other action.
A determination of stockholders of record entitled to notice of
or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting: provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize
the exclusive right of a person registered on its books as the
owner of shares to receive dividends, and to vote as such owner,
and to hold liable for calls and assessments a person registered
on its books as the owner of shares, and shall not be bound to
recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as
otherwise provided by the laws of Delaware.
ARTICLE VII
INDEMNIFICATION
Section 1. The corporation shall have power to indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding if such person
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acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe such conduct was
unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo
contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a
manner which he or she reasonably believed to be in or not
opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his or her conduct was unlawful.
Section 2. The corporation shall have power to indemnify
any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action or suit by
or in the right of the corporation to procure a judgment in its
favor by reason of the fact that such person is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such
action or suit if he or she acted in good faith and in a manner
reasonably believed to be in or not opposed to the best interests
of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the
court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem
proper.
Section 3. To the extent that a director, officer, employee
or agent of the corporation has been successful on the merits or
otherwise in defense of any action, suit or proceeding referred
to in Sections 1. and 2., or in defense of any claim, issue or
matter therein, such individual shall be indemnified against
expenses (including attorneys' fees) actually and reasonably
incurred by him or her in connection therewith.
Section 4. Any indemnification under Sections 1. and 2.
(unless ordered by a court) shall be made by the corporation only
as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is
proper in the circumstances because he or she has met the
applicable standard of conduct set forth in Sections 1. and 2.
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Such determination shall be made (1) by the board of directors by
a majority vote of a quorum consisting of directors who were not
parties to such action, suit or proceeding, or (2) if such a
quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel
in a written opinion, or (3) by the stockholders.
Section 5. Expenses (including attorneys' fees) incurred by
an officer or director in defending any civil, criminal,
administrative or investigative action, suit or proceeding may be
paid by the corporation in advance of the final disposition of
such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that such individual is not
entitled to be indemnified by the corporation as authorized in
this Section. Such expenses (including attorneys' fees) incurred
by other employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
Section 6. The indemnification and advancement of expenses
provided by this Article VII shall not be deemed exclusive of any
other rights to which those seeking indemnification or
advancement of expenses may be entitled under any agreement, vote
of stockholders or disinterested directors or otherwise, both as
to action in such individual's official capacity and as to action
in another capacity while holding such office.
Section 7. The corporation shall have power to purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability
asserted against such person and incurred by such person in any
such capacity, or arising out of his or her status as such,
whether or not the corporation would have the power to indemnify
him or her against such liability under the provisions of this
section.
Section 8. For purposes of this Article VII, references to
"the corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers and
employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall
stand in the same position under the provisions of this Article
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VII with respect to the resulting or surviving corporation as he
or she would have with respect to such constituent corporation if
its separate existence had continued.
Section 9. For purposes of this Article VII, references to
"other enterprises" shall include employee benefit plans;
references to "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan; and references
to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by,
such director, officer, employee, or agent with respect to an
employee benefit plan, its participants, or beneficiaries; and a
person who acted in good faith and in a manner such person
reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have
acted in a manner "not opposed to the best interests of the
corporation" as referred to in this Article VII.
Section 10. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article VII shall,
unless otherwise provided when authorized or ratified, continue
as to a person who has ceased to be a director, officer, employee
or agent and shall inure to the benefit of the heirs, executors
and administrators of such a person.
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of
incorporation, if any, may be declared by the board of directors
at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of
incorporation.
Section 2. Before payment of any dividend, there may be set
aside out of any funds of the corporation available for dividends
such sum or sums as the directors from time to time, in their
absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
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ANNUAL STATEMENT
Section 3. The board of directors shall present at each
annual meeting, and at any special meeting of the stockholders
when called for by vote of the stockholders, a full and clear
statement of the business and condition of the corporation.
CHECKS
Section 4. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such
other person or persons as the board of directors may from time
to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be
fixed by resolution of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Corporate Seal, Delaware". The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
ARTICLE IX
AMENDMENTS
Section 1. These by-laws may be altered, amended or
repealed or new by-laws may be adopted by the stockholders or by
the board of directors, when such power is conferred upon the
board of directors by the certificate of incorporation at any
regular meeting of the stockholders or of the board of directors
or at any special meeting of the stockholders or of the board of
directors if notice of such alteration, amendment, repeal or
adoption of new by-laws be contained in the notice of such
special meeting. If the power to adopt, amend or repeal by-laws
is conferred upon the board of directors by the certificate of
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incorporation it shall not divest or limit the power of the
stockholders to adopt, amend or repeal by-laws.
I hereby certify that the foregoing By-Laws were duly
adopted by the Board of Directors of the Corporation on
__________________, 199____.
[SEAL]
Secretary
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EXHIBIT B
SERVICE AGREEMENT
This Service Agreement is entered into on behalf of Southern
Company Communications Services, Inc. (hereinafter
"Communications"), and (hereinafter
"Customer"), wholly-owned duly formed corporate subsidiaries of
The Southern Company.
WHEREAS Communications is a subsidiary of The Southern
Company, formed and authorized to offer communications services
in accordance with authority under an application filed with the
Securities and Exchange Commission (hereinafter the "Commission")
and rendered effective by the Commission pursuant to the Public
Utility Holding Company Act of 1935; and
WHEREAS Communications intends to offer communications
services in accordance with the authority issued by the
Commission, as same may from time to time be amended in
accordance with the continuing jurisdiction of the Commission,
and in accordance with any additional requirements of state and
federal law and regulatory agencies having jurisdiction in the
premises (together hereinafter "Legal Authority"); and
WHEREAS Communications is successor to that certain Enhanced
Specialization Mobile Radio Purchase Agreement dated December 30,
1993, between Southern Company Services, Inc. and Motorola, Inc.,
designed to install a wireless communications system and
associated compatible equipment (hereinafter the "System"); and
<PAGE>
WHEREAS Customer has substantial present and future wireless
voice, dispatch, paging, and data communications service
requirements (hereinafter "Wireless Services"); and
WHEREAS Customer desires to obtain and Communications
desires to provide such Wireless Services in accordance with all
Legal Requirements.
NOW, THEREFORE, in consideration of the covenants contained
herein, Customer and Communications agree as follows:
1. Wireless Service Relationship. During the term of this
Agreement, Customer shall notify Communications of its
anticipated and actual wireless communications requirements
and Communications shall, to the extent practical, provide
those requirements in accordance with Legal Requirements.
Communications shall maintain a schedule of current prices
for the airtime and associated services and equipment that
constitute said Wireless Services and shall provide said
Wireless Services in accordance with said schedules and
applicable Legal Requirements.
2. Legal Requirements And Severability. This Agreement and all
activities taken thereunder shall be construed and
undertaken in accordance with all Legal Requirements,
including, without limitation, the authorization of the
Commission pursuant to the Public Utility Holding Company
Act of 1935, as the same may be amended from time to time.
The parties intend to maintain the Wireless Service
relationship established herein to the fullest extent
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permitted by said Legal Requirements. In the event any
provision or provisions of the Agreement or any application
of those provisions shall be invalid in any respect, the
remaining provisions of this Agreement shall remain in
effect to the fullest extent permitted by Legal
Requirements.
3. License To Customer. During the term of this Agreement,
Communications hereby licenses Customer to operate radio and
other communications equipment on and as part of the System
operated by Communications and thereby participate in the
System. In consideration of this license and in order to
effectuate this license, Customer and Communications agree
to the coordination of activities and mutual access to
facilities stated below.
4. Coordination Of Activities And Access To Facilities. During
the term of this Agreement, Communications and Customer
shall coordinate their activities so as to maximize the
responsiveness of Wireless Services to Customer's
operations, and specifically to satisfy in the most
efficient and reliable fashion the wireless communications
requirements of integrated electric utility system
operations. Said coordination will require joint planning,
mutual assistance, and physical accommodation of each
party's equipment. With respect to all such coordination
activities, each party is to be responsible for those costs
which are incurred on its behalf in accordance with
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applicable Legal Requirements. In order to obtain Wireless
Services on the most efficient and reliable basis, Customer
shall provide access to and use of its facilities to
Communications at the cost incurred, if any.
5. No Encumbrances. Communications may not encumber or
transfer any property of which Customer is the beneficial
owner and Customer may not encumber or transfer any property
of which Communications is the beneficial owner.
Communications and Customer shall cooperate to document the
ownership of property to avoid unintentionally encumbering
the assets owned by each other.
6. Term. The initial term of this Agreement shall be fifteen
(15) years, with seven (7) year renewal terms thereafter.
Either Customer or Communications may preclude automatic
renewal by providing one hundred and eighty (180) days
notice in advance of the renewal term of its intent to
terminate the this Agreement.
7. Payment. Charges for Wireless Services shall be rendered
monthly in accordance with schedules established by
Communications in accordance with Legal Requirements. In
the ordinary course, the schedules may be revised in
accordance with Legal Requirements upon thirty (30) days
advance notice; provided, however, that schedule revisions
may be made immediately in order to accommodate Customer
requests for new or changed services and schedules for
services may be agreed to in advance of service in order to
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facilitate communications and utility system planning..
Communications shall monthly invoice Customer (1) for the
basic monthly charges and custom calling features for the
next month, and (2) for usage charges and roaming fees
incurred during the prior month. Communications may
separately invoice one time activation and equipment fees.
Each invoice shall be paid within thirty (30) days of the
invoice date.
8. Effective Date. This Agreement shall be effective January
1, 1995.
9. Successors And Assigns. This Agreement shall be binding
upon the parties hereto and their successor and assigns.
IN WITNESS HEREOF, the parties hereto have executed the
Agreement the date and year below written.
SOUTHERN COMPANY
Customer: COMMUNICATIONS SERVICES, INC.:
Signature:
Print Name Print Name
Title: Title:
Date: Date:
[CONTINUED ON FOLLOWING PAGE]
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<PAGE>
[CONTINUED FROM PREVIOUS PAGE]
Address:
Southern Communications
Attn: W. Roy Barron, President
64 Perimeter Center East-Bin 093
Atlanta, Georgia 30346
Telephone: (404) 668-4800
Fax: (404) 668-4617
Attn:
Telephone: ( )
Fax: ( )
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Exhibit E
PROMISSORY NOTE
$[___________] Dated: [_________]
FOR VALUE RECEIVED, the undersigned, SOUTHERN COMMUNICATIONS
SERVICES, INC. ("Maker"), promises to pay to THE SOUTHERN COMPANY,
(hereinafter referred to, together with any subsequent holder or
transferee hereof, as "Holder"), the principal sum of
[____________________] and No/100 Dollars ($[___________]) (the
"Principal") together with interest on so much thereof as from
time to time shall be outstanding and unpaid, accruing on and
after the date hereof at the prime lending rate as in effect at
[_______________________], expressed in simple interest terms and
computed on a three hundred sixty-five (365) day year. Principal
and interest accrued thereon shall be due and payable on
[___________________].
Maker shall be entitled, at any time and from time to time,
without the consent of Holder and without paying any penalty or
premium therefor, to prepay all or any portion or portions of the
outstanding Principal and accrued interest thereon.
No delay or omission on the part of Holder in exercising any
right hereunder shall operate as a waiver of such right or any
other right under this Note. A waiver of any right or remedy on
any one occasion shall not be construed as a bar to or waiver of
any right or remedy on any future occasion.
Maker hereby waives presentment, demand for payment, notice
or dishonor and all other notices or demands in connection with
the delivery, acceptance, performance, default or endorsement of
this Note.
IN WITNESS WHEREOF, the undersigned has caused its duly
authorized representative to execute this Note to be effective as
of the day and year first above written.
"Maker"
SOUTHERN COMMUNICATIONS SERVICES, INC.
By: ____________________________________
President
<PAGE>
EXHIBIT G
FORM OF NOTICE
The Southern Company ("Southern"), 64 Perimeter Center East,
Atlanta, Georgia 30346 has filed application-declaration citing
Sections 6(a), 7, 9(a), 10, 12(b) and 13 of the Act and Rules 45,
50, 81, 87, 90, 91, 93 and 94 thereunder.
Southern proposes to establish a new subsidiary
("Communications") which will design, construct, finance,
maintain and operate the Southern Electric System's
communications systems, including a mobile radio network that,
when complete, will provide contiguous mobile radio service
throughout the service area of the Southern Electric System and
in adjacent areas such as along transmission corridors between
The Southern System and interconnected utilities, and in areas in
which operating personnel are often dispatched to restore service
or otherwise travel in the conduct of business generally
throughout Georgia, Alabama, Mississippi and points in Florida.
Communications would sell communications services to affiliates
of Southern and to their industrial, commercial and other retail
and wholesale customers including interconnected utilities, as
well as federal, state and local public safety, law enforcement
and emergency management governmental agencies, as well as other
agencies of the governments of the states of Georgia, Alabama,
Mississippi and Florida (the "Base Service"). It would also
offer communications services beyond the Base Service but within
the states of Georgia, Alabama, Northern Florida and Southern
Mississippi. Sales to non-affiliates will be offered on a<PAGE>
private contract basis with non-affiliates charged on the basis
of the fair market value of the services to be provided.
Initially, Communications will install, construct and
operate a mobile radio system within the Southern Territory and
will acquire radio frequencies by application to the Federal
Communications Commission ("F.C.C.") or by purchase.
Existing communications facilities, including fiber optic
capacity and access to microwave towers, may be acquired through
lease from affiliated companies or third parties. All
transactions between Communications and other affiliated
companies will be undertaken at cost in compliance with Rules 90
and 91, or subject to prices comparable to those offered to the
public and subject to F.C.C. or other public regulation, pursuant
to Rule 81.
Southern proposes to invest up to $179 million from time to
time through December 31, 1998, through purchases of
Communications' capital stock, loans and capital contributions to
Communications, or guaranties of obligations of Communications or
a combination thereof. Communications may issue notes to third
party lenders having a term of 5 to 20 years which may be
guaranteed by Southern.
Applicant states that the formation of the new subsidiary is
necessary to replace outmoded communications systems and to
facilitate the design and development of communications services
on a system-wide basis leading to greater standardization of
equipment, the elimination of redundant and incompatible
capabilities and greater operating efficiencies, and to
2<PAGE>
facilitate quicker and more orderly restorations of electric
service following storm related outages and other disturbances,
as well as to enhance Southern's ability to assist its operating
companies, interconnected utilities, industrial and wholesale
customers, and governmental public safety and emergency
management agencies following such storm related outages and
other disturbances.
3<PAGE>
