FCC Record, Volume 1, No. 7, Pages 1267 to 1368, December 22, 1986 - January 2, 1987 Page: 1,274
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Federal Communications Commission Record
13. Finally, we find the accounting treatment for asset
transfers and pre-operational expenses described by
Southwestern Bell to be adequate. Southwestern Bell has
stated that it will operate the Metromedia properties
through subsidiaries which are structually separate from
SWBT. We expect Southwestern Bell to conform fully
with the Commission's rules and policies regarding structural
separation in its provision of cellular services and
14. While Southwestern Bell's proposed acquisitions
will involve a substantial outlay of funds, Southwestern
Bell's current revenues appear to be more than adequate
to finance the acquisition. 4 Southwestern Bell will conduct
its operations in accordance with the Commission's
structural separations requirements, and we will monitor
the relationship between Southwestern Bell and its subsidiaries.
The accounting treatment of proposed asset transfers
and preoperational expenses is adequate.
VI. ORDERING CLAUSES
15. Accordingly, IT IS ORDERED, that the "Motion
for Ruling Concerning Capitalization Plan Filing Requirements,"
submitted by Southwestern Bell Corporation
on August 15, 1986, IS DENIED.
16. IT IS FURTHER ORDERED, that the capitalization
plan submitted by Southwestern Bell Corporation on
August 15, 1986, IS APPROVED to the extent indicated
above. The capitalization authorized under Section
22.901(d)(3) of the Commission's Rules is increased by
$1,471,074,000, and the capitalization authorized under
Section 64.702(d)(4) is increased by $100,000,000.
17. IT IS FURTHER ORDERED, that this Memorandum
Opinion and Order IS EFFECTIVE UPON ADOPTION.
FEDERAL COMMUNICATIONS COMMISSION
Chief, Common Carrier Bureau
X Public Notice, "Southwestern Bell Corporation Files
Capitalization Plan for Provision of Cellular Radio Services and
Related CPE," Mimeo No. 6734.
2 On August 15, 1986, at the same time it filed the new
capitalization plan, Southwestern Bell also filed a "Motion for
Ruling Concerning Capitalization Plan Filing Requirements."
In this pleading, Southwestern Bell asks for a ruling that the
companies listed in Section 22.901(b) of the Rules, 47 C.F.R.
22.901(b), (i.e., the Regional Bell Operating Companies) need
not file a capitalization plan when acquiring cellular mobile
franchises outside areas where their operating telephone subsidiaries
provide public landline message telephone service. Southwestern
Bell contends that Section 22.901(d)(3) was adopted
only to apply to the initial cellular authorizations within areas
where their operating telephone subsidiaries provided wireline
service. A primary purpose of the Commission's review of
capitalization plans pursuant to Section 22.901(d), however, is
to permit an assessment of the impact of the proposed asset
transfers on the conventional wireline service ratepayer. See
Capitalization Plan of Pacific Telesis for COMET, Inc., AAD
5-1213, released February 27, 1986 (COMET Capitalization Order
) at para. 33. The same considerations apply regardless of
whether the cellular operation involved is located within or
without the affiliated telephone operating company's service
area. We will therefore deny Southwestern Bell's Motion.
3 No specific approval of a capitalization plan has been granted
to Southwestern Bell under Section 22.901. We have heretofore
concluded that each of the seven Regional Bell Operating
Companies is allowed a capitalization level of one-seventh, or
$142 million, of the amount approved for AT and Petition for Approval
of Modification of the Permanent Capitalization Plan of
Southwestern Bell Telecommunications Inc. to Increase Its Level
of Capitalization, Mimeo. No. 5565, released July 5, 1985.
5 Amendment of Section 64.702 of the Commission's Rules
and Regulations (Second Computer Inquiry), 77 FCC 2d 384
(1980) (Final Decision ), reconsideration, 84 FCC 2d 50 (1980),
further reconsideration, 88 FCC 2d 512 (1981), aff d sub nom.
Computer and Communication Industry Ass'n v. FCC, 693 F.
2d 198 (D.C. Cir.), cert. denied, 461 U.S. 938 (1983).
6 Policy and Rules Concerning the Furnishing of Customer
Premises Equipment, Enhanced Services and Cellular Communications
Services by the Bell Operating Companies, 95 FCC 2d
1117 (1984), aff d sub nom. Illinois Bell Telephone Company v.
FCC, 740 F. 2d 465 (7th Cir. 1984), aff d on recon., FCC
84-252, 49 Fed. Reg. 26056 (1984), recon. aff d sub nom. North
American Telecommunications Ass'n v. FCC, 772 F. 2d 1282
(7th Cir. 1985).
7 Applications for Commission approval of the transfer of
control of the various cellular systems involved (File Nos. 29700
through 29702-CL-TC-1-86) were granted by the Chief, Common
Carrier Bureau, on December 11, 1986.
8 SWBT pays out all of its earnings in dividends to Southwestern
Bell. Southwestern Bell then makes such equity
infusions into SWBT as may be necessary.
9 See COMET Capitalization Order, supra, note 2 at para. 33.
10 Id. at para. 32.
nl Securities and Exchange Commission Form 10-K, submitted
by SWBT for fiscal year ending December 31, 1986, p. 20.
13 Annual Reports of Southwestern Bell Corporation for 1984
14 In its September 25, 1986 "Petition to Deny" the transfer of
control applications referenced in Note 7 supra, LIN Cellular
Communications Corp. (LIN) generally asserts that Southwestern
Bell's agreement with Metromedia "contemplates substantial
guarantees of repayment that appear to violate" the separate
subsidiary requirements of Section 22.901(c). Petition to Deny
at pp. 18-19. In support of this position, LIN refers to the notes
which Southwestern Bell will issue and states that
"Southwestern Bell must provide reasonable assurances, either
through guarantees or agreements to make further contribu1274
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United States. Federal Communications Commission. FCC Record, Volume 1, No. 7, Pages 1267 to 1368, December 22, 1986 - January 2, 1987, book, January 1987; Washington D.C.. (digital.library.unt.edu/ark:/67531/metadc1579/m1/13/: accessed January 24, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.