April 24, 1998
     
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C.  20549
     
Attention: Mr. Jonathan G. Katz, Secretary
     
Re:  Proposal to Amend Form S-8 -- File No.  S7-2-98
     
BellSouth Corporation, like many other large corporations, has a number of 
employee benefit plans -- stock options, deferred compensation, qualified 
retirement plans and stock purchase plans, to name a few.  In total, we have 7 
benefit plans that are the subject of Form S-8 registration statements.   While 
the Form S-8 registration process has been increasingly simplified over the 
years, there is still a significant maintenance effort necessary to register 
offerings, prepare prospectuses and other offering materials and constantly 
monitor compliance of these activities with the requirements of the Securities 
Act of 1933.  Numerous  personnel in our Controllers, Human Resources and Legal 
Departments are required to devote substantial time to these endeavors; 
therefore, Form S-8 proposals are of considerable interest to BellSouth.
     
I.  CONSULTANTS
     
BellSouth does not currently issue securities to consultants, so our interest in
this aspect of the proposal is less than that of some issuers.  However, it is 
possible that at some point this option might be useful to our company, and we 
would like to offer our views of certain aspects of the proposal in this light.
     
If the concern is really that financial consultants have inappropriately been 
used as conduits for issuing shares into the market, we believe that the abuses 
could be more directly addressed than by requiring more disclosure.  While 
disclosure in most other contexts is an effective means to protect investors, we
do not believe that it would serve this purpose in this context and would 
unnecessarily complicate what should be a simple registration/disclosure 
paradigm.    Consultants (the buyers) obviously need no disclosure of their 
identity or the nature of their services, and the disclosure of much of that 
information might invade legitimate privacy concerns.  Similarly, post-issuance 
disclosure would not directly address the practices.  The Commission should not 
assume disclosure alone will eliminate or contribute to the elimination of 
offering abuses.
     
Requiring registrants to check a box on the cover to indicate that offerees 
include consultants would be desirable, inasmuch as it would allow the staff to 
pull those registration statements for review.  In this regard, denying 
immediate effectiveness to those registration statements or eliminating the 
presumption that they were filed on the correct form would be appropriate; 
however, we do not believe a generally applicable rule change is necessary. 
Similarly, registrants should be required to certify compliance with any new 
rules requiring consultant services to be bona fide and not evasive of Section 
5. 
     
     
We see no rationale for limiting consultant issuances to any particular 
percentage of the public float.  If the abuses underlying this proposal can be 
effectively curtailed by reasonably narrow means, this further limitation serves
no particular purpose, and we do not believe that the Commission should create a
limitation simply to reduce the likelihood that some sales to consultants may 
violate the Form S-8 standards.  
     
II. TRANSFERABILITY
     
We are glad to see the Commission finally propose Form S-8 eligibility for 
transferable options.  However, we do not agree that transferability should be 
limited to options that have been given to family members.  We believe that the 
only limiting factor should be that the transfers be without consideration in 
order to eliminate the possible abuse by issuers in capital-raising 
transactions.  Most donees (especially charitable organizations) immediately 
sell upon receiving the equity security, so their need for issuer information is
virtually nil -- their only concern is whether there is a spread between the 
exercise and market prices.  Other donees who plan to speculate on the security 
will normally refrain from exercising until they wish to cash out, because it is
obviously in their economic interest to let the price run on the number of 
shares subject to option rather than on the far fewer number of shares resulting
from the exercise.
     
III.  MISCELLANEOUS
     
We are intrigued with the notion in the Regulation 701 proposal that the 
applicable limits apply to securities sold, not offered.  It strikes us that 
this sort of registration paradigm would be appropriate for securities sold 
pursuant to employee benefit plans generally and not just those for which a Rule
701 exemption is claimed.  If this approach is taken, Form S-8 should be 
understood to register sales, not offers, which would simplify a number of 
esoteric issues.  Securities sold under benefit plans, such as option, purchase 
and deferred compensation plans, are unlike capital-raising offerings in many 
respects, one of which being that the issuer does not know how many securities 
will be actually sold and doesn't really care.  According to the rules, it 
registers an estimated two years' worth of securities and then tracks sales to 
determine when the plan shelf needs to be "reloaded."  If the "take" rate is 
higher than anticipated or if market movements drive more options in-the-money 
than are registered, an issuer may have a technical Section 5 violation 
resulting from unregistered offers.  Also, there is the confusion of determining
when offered securities can be reofferred without further registration.  For 
instance, if an exercisable out-of-the-money option goes in-the-money and then 
out-of-the-money again, what is the impact on the option shelf registration 
statement?  How does one keep track of offers of company stock available as an 
investment vehicle in a qualified retirement plan, especially where employee 
participants periodically move their investments into and out of the stock fund?
 How does one track offers of deferred compensation from year to year?  
     
A number of years ago, the staff of the Commission was also asked about a 
similar question relating to sales -- how are issuers supposed to keep track of 
securities registered on shelf registration statements for qualified plans that 
offer issuer stock as one of many investment choices?  Prior to 1990, issuers 
registered a finite dollar amount of plan participations on which the 
registration fee was computed; an indefinite number of shares was also 
registered without the requirement to pay any additional fee.  When the Form S-8
rules were last amended in 1990 (Release No. 33-6867), the scheme was reversed; 
now, under Rule 457(h) issuers register and pay a fee on a definite number of 
shares and register (but do not pay any fee on) an indefinite number of plan 
participations.  This seemingly innocent change put the share counting 
methodology up in the air with absolutely no staff or regulatory guidance. 
Shares constantly "circulate" through 401(k) plans as participants elect to 
transfer their money into and out of and into again and out of again the issuer 
stock fund.   Employees' accounts are credited with issuer stock in respect of 
old money (fund switches), new money (ongoing payroll deductions) and employer 
matching contributions.  If each transfer in were counted as a purchase, Form 
S-8 shelves would be rapidly exhausted and the result would be terribly 
expensive as the same shares were deemed to be sold over and over again within 
the same plan and even over and over to the same participants.  The easiest and 
cheapest methodology many issuers use in the absence of Commission guidance is 
the netting approach, which requires a comparison at some intervals of the 
number of shares in the plan, with net increases being considered sold off the 
Form S-8 shelf.  In between these methodologies are more complex schemes that 
further differentiate between new money and old money and other subtleties. 
Since Form S-8 is supposed to be a simple arrangement, recognizing that employee
benefit plans are essentially compensatory and the regulatory requirements 
should be minimized, we urge the Commission to authorize a netting approach. 
The big hang-up before was Section 5, since it was not clear that a netting 
approach was consistent with a literal reading of Section 5.  However, with the 
National Securities Markets Improvement Act of 1996, the Commission now has the 
power to exempt offers and sales from Section 5 "to the extent that such 
exemption is necessary or appropriate in the public interest, and is consistent 
with the protection of investors."
     
Under this authority, we urge the Commission to take the following actions:  (i)
exempt offers under employee benefit plans that would qualify for registration 
on Form S-8 or an exemption under Rule 701; and (ii) adopt a netting approach 
for measuring shares sold pursuant to a registration statement or allow for 
post-issuance registration of shares deemed to be sold (similar to investment 
companies).
     
As always, we would be happy to discuss these comments in more detail if it 
would be helpful.       
     
Very truly yours,   
     
Clarence B. Manning
General Attorney