be used for computation of the rate of return for shared network facilities shall be the authorized rate of return for plant used in interstate services, i.e., 12.75 percent. See Part III infra.7
The delay ordered by the FCC expires on April 3, 1984. The Court is advised by the parties that, in any event, (1) the Commission must allow the access tariffs filed by the Operating Companies, or some variation thereof, to become effective on April 15, 1984, inasmuch as the ENFIA tariffs which are based on voluntary agreements, expire on that date;
and (2) the Operating Company tariffs will take effect on May 1, 1984, under a provision of law which does not permit the FCC to suspend tariffs for more than five months.
The Court has not investigated or considered whether the Commission has the authority under its enabling statutes to ignore these deadlines and thus to prolong the present impasse. The Court assumes that the Commission will not do so, first, because that agency, like this Court, is surely sensitive to the need for everyone, particularly those in governmental authority, to minimize any existing uncertainties and their duration,
and second, because the Commission, like this Court in this and in past instances,
would not wish to precipitate a conflict between the agency's responsibilities and a court judgment.
For purposes of the resolution of the present motions, the Court will assume, therefore, that the current arrangement between AT&T and the Operating Companies is strictly of an interim nature and will expire in April 1984.
In addition to the conceptual objection to the AT&T-Operating Company arrangement -- that it perpetuates the partnership relationship among the entities -- those who oppose that arrangement attack primarily the rate of return that the Operating Companies will earn on their investment devoted to providing access to AT&T.
The current authorized rate of return is 12.75 percent;
yet the interim arrangement provides to the Operating Companies only a rate of 11.5 percent. The opponents suggest that it is difficult to understand why the Operating Companies would settle for a return less than that which, according to their representations both to the federal and state regulators, they require in the context of arm's length bargaining.
They view this lower rate of return as suspect, especially since, in their view, the Operating Companies expect to earn a rate of return of 12.75 percent from their end users. The basic response made by AT&T is that, whatever may be the authorized rate of return, various factors (e.g., wage increases and increases in depreciation rates) have combined to reduce the actual earnings realized under the joint rates to less than 11.5 percent,
and that an arrangement based on that figure is therefore justified.
AT&T's assumptions may well be correct, but the fact is that the precise basis therefor -- e.g., the impact of the wage increases on the rate of return -- has been a matter of understanding and agreement among the Bell System partners rather than of a tariff passed on by a governmental body with due opportunity for scrutiny of all the relevant factors. Similarly, Bell Atlantic states that the agreement "would require the BOCs to provide AT&T with access services in return for access charges, imposed on an arm's length basis, without the involvement of any sharing of costs or earnings between AT&T and the divested Bell Companies." Notice of Withdrawal at 4. Since the agreement represents a private arrangement between AT&T and the Operating Companies, these observations too, and others like them, must be taken largely on faith.
In fact, the agreement has not been submitted for approval either to this Court or to the FCC. That lack of outside scrutiny does raise some concerns.
Notwithstanding these considerations, the Court will grant a waiver of the decree's provisions so as to sanction the present arrangement for an interim period. The parties appear to have made an effort to approximate the access tariff mechanism contemplated by the decree as closely as they were able to do. The present arrangement is a relatively brief one, expiring approximately three months from the date of divestiture. And even that deviation from the terms of the decree was brought about not by a deliberate action of the parties but was, in effect, forced upon them by the FCC's failure to act on tariffs which had been timely submitted.
Accordingly, the Court hereby rules, in the exercise of its authority under sections VII and VIII(I) of the decree, that notwithstanding section II(D), section B(1) of Appendix B, the provisions of pp. 64-65 of the plan of reorganization, and the fundamental purpose of the decree to end the association between AT&T and the Operating Companies, these entities may, after January 1, 1984 and until April 3, 1984, operate with respect to compensation for AT&T's access according to the terms of their agreement announced to the Court by the Bell Atlantic notice of November 10, 1983.