NEWSReport No. CC 95 -37             COMMON CARRIER ACTION                 June 23, 1995


                   FCC, OHIO AND WISCONSIN COMMISSIONS
            COMPLETE JOINT AUDIT -- ENTER INTO CONSENT DECREE
               CONCERNING AMERITECH AFFILIATE TRANSACTIONS


     The FCC and the public service commissions of Ohio and Wisconsin have completed
a joint audit of Ameritech affiliate transactions and negotiated a Consent Decree with the
Ameritech Telephone Operating Companies (AOCs) to resolve issues raised by the audit. 
Pursuant to the Consent Decree, the FCC and the state commissions have agreed to refrain
from pursuing enforcement actions against the AOCs.  Ameritech has agreed to make serious
and substantial changes to its documentation regarding affiliate transactions accounting and
reporting practices.  Ameritech also has agreed to pay $375,000 to the U.S. Treasury,
$200,000 to Ohio, and $100,000 to Wisconsin.

     The Commission currently has in place rules to govern transactions between regulated
carriers and their non-regulated affiliates.  These rules have become more important over the
past few years as telecommunications carriers have diversified to offer a wide variety of
regulated and nonregulated products and services.  The Commission's affiliate transactions
rules, adopted in the Commission's 1986 Joint Cost proceeding, provide a valuation
methodology for such transactions and govern the apportionment of carriers' costs between
regulated services and nonregulated activities. The carriers are required to use these cost
apportionment rules to develop cost allocation manuals (CAMs) which describe in detail how
their costs are apportioned between regulated and nonregulated operations.  The CAMs also
identify each affiliate that engages in transactions with a carrier, and describe the nature,
terms and frequency of those transactions.  CAMs are available for public inspection at the
FCC. 

     A joint audit team, including Commission auditors and auditors from the public
service commissions of Ohio and Wisconsin, examined transactions between the AOCs  and
their nonregulated affiliate, Ameritech Services, Inc. (ASI) during 1992.  (ASI provides
centralized management and various product and services support for the AOCs.)  The audit
team's objective was to evaluate compliance with the Commission's affiliate transactions
rules, and specifically, to determine whether ASI's costs are properly identified and allocated
to regulated and nonregulated accounts.  The audit team found that, in many cases,
Ameritech did not provide or could not produce sufficient documentation to allow a 

                                  (over)

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determination of whether the costs associated with ASI services provided to the AOCs had
been properly allocated between regulated and nonregulated operations.  In other cases, the
audit team concluded that Ameritech had not properly allocated such costs. 

     The Commission found that resolving the issues  in the joint audit by adopting the
Consent Decree was in the public interest.  The joint audit concerned carrier compliance with
Commission affiliate transaction rules.  The audit findings led to negotiations with Ameritech
that produced a settlement agreement that addressed the auditors' documentation concerns.
This forestalled the need to take enforcement action.  Pursuant to the Consent Decree, the
parties also have agreed to release the Joint Audit Report, including Ameritech's response to
the joint audit team's findings. The Commission adopted an Order authorizing release
concurrent with adoption of the Consent Decree.

     Actions by the Commission June 9, 1995, by Memorandum Opinion and Order and
Consent Decree Order (FCC 95-222,  95-223).  Chairman Hundt, Commissioners Ness and
Chong, with Commissioners Quello and Barrett concurring in the result and Commissioner
Barrett issuing a separate statement.

                                 - FCC -



     News Media contact: Susan Lewis Sallet at (202) 418-1500.
     Common Carrier Bureau contact: Thomas Beers at (202) 418-0872.