I believe that infrastructure, including the telecommunications infrastructure is the foundation of any advanced economy. Without it, Arizona would be the economic equivalent of a third world country. For the past two years, the telecommunications industry has been in the throes of a significant industry shakeout. Both large and small companies have fallen prey to an array of problems, including under-funded business plans, over-zealous capital expansion leading to over-capacity in certain facilities and services, diminished consumer demand, poor management and ill-fraught accounting schemes. The result has been the collapse of stock prices, a rash of bankruptcy filings by large and small companies alike, and fire sales of excessive telecommunications plants and equipment.

I agree with most analysts' predictions that the financial turn-around for the telecommunications industry is probably still a year or so away. I further expect the surviving companies to be those that can stabilize their balance sheets and income statements by reducing debt loads and lowering operating costs, while also expanding customer base by exceeding consumer expectations through top notch service quality. In other words, they will return to sound, fundamental business practices. The industry will likely undergo further consolidation with some companies exiting the market altogether and others being acquired or merged with other companies.

This state of affairs will present opportunities for the best managed companies, and for growing numbers of consumers gaining access to advanced communications services. I firmly believe the actions of the Corporation Commission will be essential in establishing a regulatory environment in which the competitive telecommunications industry can thrive. Specific actions include:

1. Streamline the regulations of competitive companies and services in ways to encourage further investment in advanced telecommunications infrastructure that is useful to Arizonans. For example, speed up the process for granting operating licenses to new providers. Place greater emphasis on market solutions for truly competitive companies and services rather than on imposing additional regulations that do not benefit consumers.
2. Take a greater interest in the corporate governance of telecommunications companies. For example, ensure companies have adequate internal auditing guidelines in place to safeguard against corporate abuse and preserve the integrity of corporate accounting practices.
3. As mergers, acquisitions and other requests for regulatory actions come forward for approval by the Corporation Commission, the Commission should seek "win-win" opportunities to expand advanced telecommunications infrastructure into the rural areas of the state.
4. Work with the Governor's Office and other state agencies to design and implement programs to encourage deployment of advanced infrastructure throughout the state. Also work together with telecommunications companies and the state's municipalities to ensure fair and legal access to public rights-of-way for construction of telecommunications infrastructure.
5. Vigorously enforce the terms and conditions of Interconnection agreements between the incumbent carriers and competitors to ensure that competitive services are offered.
6. Expand the commission's consumer service function by providing more public information about competitive telecommunications services for consumers and greater assistance to consumers in navigating the competitive landscape.

As I indicated in my response to the first questions, the difference between advanced and emerging economies often boils down to the state of their infrastructures. Hence, the Commission's actions in overseeing the development and expansion of the telecommunications infrastructure affect the ability of Arizonans to receive necessary and essential services and for the state's economy to participate and prosper. The Commission, for example, is responsible for granting operating licenses, establishing and changing rates, and ensuring the delivery of reliable and economical telecommunications service to consumers. The manner in which the Commission carries out these responsibilities can shape the development of the industry within the state and thereby influence its contribution within the overall state economy.

I believe the Commission's priority for advancing the development of the telecommunications infrastructure is two-fold.

First, the Commission as a customer-service agency, should re-focus its public outreach programs to better educate, inform, and assist consumers about competitive telecommunications services. This would include providing useful consumer information about the selection of providers and services as well as consumer rights. Making better access to consumer information on the Commission's web site should be a priority.

The second aspect of the Commission's priority for encouraging the development of the telecommunications infrastructure is to create a balanced regulatory climate that protects consumers and encourages investment. The Commission should regulate competitive telecommunication companies and services with a lighter touch than it regulates monopolies. Heavy-handed regulation of competitive companies and services should give way to market forces where appropriate. However, as I mentioned above, the Commission must vigorously oversee interconnectivity among the providers to ensure adequate service, and take any necessary actions to facilitate and enforce service quality and consumer rights.

I agree with the observation that access to advanced telecommunications services has not occurred uniformly among Arizona's social, cultural, geographic and economic groups. I also agree that efforts should be made to reduce those disparities.

In terms of which areas of disparity should be focused on first, I believe that those relating to geographic and economic disparity provide the greatest opportunity and fewest obstacles to overcome. In order words, telephone service should be available to all who ant it.

I think the following programs should be undertaken to assist in bridging the Digital Divide:

• Inform, educate and assist consumers in taking advantage of federal and
• state programs that exist to help low-income individuals gain access to telecommunications services. The FCC Universal Service Programs, for example, support low-income, high-cost areas, schools and libraries, and rural health care.
• Use the fines and penalties collected from Qwest and other providers for
• missed performance standards to fund Universal Service programs in Arizona.
• Re-write Arizona's Universal Service rules to streamline the process under which high-cost area providers may apply for Universal Service funding.
• Encourage the deployment of the telecommunications infrastructure by removing regulatory barriers, streamlining the regulatory process for competitive services and further encouraging competition.
• Enforce terms and conditions of Interconnection Agreements between incumbent carriers and competitors who must purchase wholesale service components from the incumbents. This will facilitate competition for providing basic as well as optional service.
• Coordinate with, and assist other state and local government agencies in advancing programs to bring wireline and wireless telecommunications services to rural and insular areas of the state.

First, I agree with the goals of Universal Service mandated by Congress in the 1996 Telecommunications Reform Act. These goals are to: promote the availability of quality services at just, reasonable and affordable rates; and increase access to advanced telecommunications services to all consumers, including those in low income, rural, insular and high cost areas. My definition, then, of Universal Service would require access and availability of services to accomplish these goals.

The Universal Service Fund can help bridge the Digital Divide by providing assistance to "at risk" populations so they can gain access to telecommunications services.

The Commission's existing Universal Service Fund is targeted to high cost areas. The rules pertaining to the implementation of this fund should be re-written to streamline the process under which high-cost providers can obtain access to the fund and to consider extending application of the fund to competitive companies willing to provide advanced services to a broad range of consumers.

Additionally, as my answer to the prior question indicates, the Commission should also design and implement public information programs to inform, educate and assist consumers in taking advantage of federal and state programs that exist to help low-income individuals gain access to telecommunications services.

Protecting the integrity and safety of electronic data is an important consideration in today's society. While the Corporation Commission does not regulate the content of specific distribution of Internet messages, it does play a critical role in ensuring safe and adequate transmission capacity and that laws relating to customer privacy are enforced. The Commission also has a role in ensuring that telecommunications providers comply with all state and federal laws relating to law enforcement compliance measures, such as wire-taps.

The Commission can enact rules that impose restrictions on the use of customer information by telecommunications companies and to otherwise respect the privacy of Arizona consumers. I believe, for example, that the Commission should require all telecommunications companies to adopt an "opt-in" approach toward marketing to Arizonans and sharing consumer information with outside partners. An "opt-in" requirement would restrict the use of customer information for marketing purposes only to customers who explicitly authorize such use in advance. Qwest's recent disastrous attempt to require Arizonans to call an understaffed, unavailable and frequently-busy number in order to protect their privacy should never be repeated.

The Commission can also do much to improve the information available to consumers about their privacy rights and illegal telemarketing practices. Both state laws and rules enacted by the Federal Communications Commission place certain restrictions on certain telemarketing practices. For example, although the Arizona Legislature has not enacted a "do not call" law, under federal rules, consumers can (for a small fee) request their telephone number be placed on a do not call list. The Commission should prepare and distribute fact sheets and consumer alerts that clearly explain consumer privacy rights and programs to protect these rights. This information should be available on the Commission's web site which is presently inadequate in providing useful information to consumers. The Commission should also assume a leadership role at the Arizona Legislature to educate legislators about privacy issues, and assist in the development and implementation of a workable "Do Not Call" law.

I believe the Corporation Commission should be judged on how responsive it is to the public. A very good measure is to compare the level of public service provided by the Corporation Commission to its fellow state commissions. In this comparison, I would ask the following questions, in relation to similar services provided by other state commissions:

• Does the Commission provide useful, timely and easily available information to consumers about important public utility consumer issues, including how to file a complaint?
• Does the Commission have an adequate public assistance outreach program to inform consumers about Commission activities and consumer assistance programs?
• Does the Commission have a useful, up-to-date web site to enable the public electronic access to information and assistance relevant to consumer issues?
• Is it easy for the public to participate in the Commission's deliberations?
• Is the Commission's staff adequately trained to properly assist consumers with problems and issues?
• Are utility applications processed in an efficient and timely manner?

1. Coming to terms with the transition to a competitive market for electricity. How does the Commission slow down or otherwise alter the process for moving to a competitive market in a way that provides benefits to consumers and prevents the abuses that have occurred in California. Further ensuring that Arizonans have an adequate, reliable, and economical supply of electricity from utilities that burn cleaner fuels and use the least amount of water.
2. Enforcing rules and laws governing the interaction between the incumbent and competitive telecommunications companies, and undertaking other regulatory actions necessary to extent competitive markets for telecommunications services.
3. Re-focusing its activities as a consumer-oriented agency, providing useful, timely and easily accessed information to assist consumers in their interaction with public service corporations. Further ensuring that proper accounting procedures are followed by all companies so that consumers can be certain that the information provided by companies is accurate.