-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, BSzIbiVQo+UZWhl02Y3e4h3wFir4gbQm8/u5ZkQ4253gLBkXXqxLtbXmOUeV0SNV 2lQry93teuw0obu3nB7PAg== 0000092122-94-000076.txt : 19941219 0000092122-94-000076.hdr.sgml : 19941219 ACCESSION NUMBER: 0000092122-94-000076 CONFORMED SUBMISSION TYPE: U-1/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19941216 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN CO CENTRAL INDEX KEY: 0000092122 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 580690070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: U-1/A SEC ACT: 1935 Act SEC FILE NUMBER: 070-08233 FILM NUMBER: 94565043 BUSINESS ADDRESS: STREET 1: 64 PERIMETER CTR EAST CITY: ATLANTA STATE: GA ZIP: 30346 BUSINESS PHONE: 4043930650 U-1/A 1 AMENDMENT N0. 3 TO FORM U-1 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 (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 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 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 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 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 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 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 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 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 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 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 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 "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 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 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 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 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 - 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 - 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 (b) No other federal agency has prepared or is preparing an environmental impact statement with regard to the proposed transactions. 57 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 EX-99 2 EXHIBIT A-1 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. 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 -2- EX-99 3 EXHIBIT A-2 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. 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 -2- 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. -3- 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 -4- 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 -5- 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 -6- 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. -7- 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 -8- 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 -9- 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 -10- 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. -11- 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 -12- 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. -13- 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 -14- 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. -15- 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 -16- 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 -17- EX-99 4 EXHIBIT B 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 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 - 2 - 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 - 3 - 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 - 4 - 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] - 5 - [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: ( ) - 6 - EX-99 5 EXHIBIT E 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 EX-99 6 EXHIBIT G 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 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 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 -----END PRIVACY-ENHANCED MESSAGE-----