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10-K 1 a2104641z10-k.htm 10-K

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K
(Mark One)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the transition period from

to

COMMISSION FILE NUMBER 1-8607

BELLSOUTH CORPORATION
A GEORGIA CORPORATION

I.R.S. EMPLOYER
NO. 58-1533433

1155 Peachtree Street, N.E., Room 15G03, Atlanta, Georgia 30309-3610

Telephone number 404-249-2000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
TITLE OF EACH CLASS

NAME OF EACH EXCHANGE

ON WHICH REGISTERED
See Attachment.

See Attachment.

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:

None.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes X No
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).
Yes X No
At January 31, 2003, 1,860,990,807 shares of Common Stock and Preferred Stock Purchase Rights were outstanding.
At June 30, 2002, the aggregate market value of the voting and non-voting common stock held by nonaffiliates was
$58,987,546,506.

http://www.sec.gov/Archives/edgar/data/732713/000104746903007358/a2104641z10-k.htm 8/17/2015

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provide high-speed Internet access and entertainment services. These services also utilize new technologies that provide
for the simultaneous, high-speed transport of voice, data, still images and video.
Revenue growth from data telecommunications slowed during 2002 as sales of wholesale data transport services to
other communications providers, including long distance companies and competitive local exchange carriers, continue to
be weak, driven by weak economic conditions and bankruptcies, including those in the telecommunications sector.
Over the last several years, the demand for high-speed access to the Internet has increased substantially. Although
fiber optics in our core network is well suited to provide high-speed access, the traditional switched access lines, which
connect many businesses and most residences to our network are not capable, in their original state, of delivering high
speed access. In response, we have deployed digital subscriber line (DSL) products which enhance the existing switched
lines and provide Internet access speeds up to 1.5 Megabits per second, which is nearly 30 times faster than today's 56K
dial-up modems. We offer these DSL products to other carriers and to Internet service providers who use these products to
provide Internet services to their customers. We also offer Internet access services using these DSL products directly to
our customers in 74 markets under the name BellSouth FastAccessDSL service. We offer our FastAccess customers a
self-install kit for these products and 96% of residential customers requesting service have elected to self-install in recent
months with a success rate of about 97%. We have approximately 73% of the households in our market qualified to
receive DSL and ended 2002 with over one million subscribers served over our DSL facilities.
OTHER COMMUNICATIONS GROUP REVENUES
Other Communications group revenues are comprised primarily of charges for billing and collection services for long
distance carriers, enhanced white pages listings, customer premises equipment sales and maintenance services. Other
Communications group revenues also include amounts received from the universal service fund for support of high-cost
areas. Other Communications group services provided approximately 6% of BellSouth's total operating revenues for 2002,
2001 and 2000.
We currently offer local payphone services through a separate subsidiary of BST, and we include the revenues from
this business in other Communications group revenues. We plan to sell or take out of service our public pay-phones by the
end of 2003. Our exit plan contemplates a gradual phase-out of the business. Accordingly, we do not expect any material
financial impact on results of operations with respect to exiting this business.
REGULATORY ENVIRONMENT
FEDERAL REGULATORY MATTERS
The FCC regulates rates and other aspects of carriers' pro-vision of interstate (across states) telecommunications services
while state regulatory commissions have jurisdiction over carriers' provision of intrastate (within states)
telecommunications services. The FCC has considerable authority to establish policies for pricing and terms of local
interconnection that had once been considered the exclusive jurisdiction of the state regulatory authorities. We expect the
FCC to continue policies that promote local service competition.
6

BELLSOUTH 2002

Price Regulation
The FCC regulates interstate prices using a price regulation plan, which is known as a "price cap" plan. The FCC's price
cap plan limits aggregate price changes to the rate of inflation, minus a productivity offset, plus or minus other cost
changes recognized by the FCC. The productivity factor can vary among services. Interstate prices have been decreasing
over the last few years as a result of low inflation in the US economy.
Access Charge Reform
Federal policies implemented by the FCC have strongly favored access reform, through which the historical subsidy for
local service contained in network access charges paid by long distance carriers is funded instead by the end-user, by
universal service funds, or both.

http://www.sec.gov/Archives/edgar/data/732713/000104746903007358/a2104641z10-k.htm 8/17/2015