As most people are aware, the telecommunication industry has been in a steady decline for the last couple of years. Companies that were once considered strong and viable are now facing bankruptcy. Since 1996 when I was first elected to the Corporation Commission, I have been working on strengthening the competitiveness of the market by supporting policies that require Qwest to provide affordable, reliable and fair access to their competitors. For instance, as a Commissioner, I voted in favor of reducing the access rates a competitor must pay Qwest by nearly 50%, significantly improving. the current regulatory environment for increased competition in Arizona. It has never been better.

That being said, many factors outside the control of the Corporation Commission will play a large role in what the competitive market will look like in Arizona in the next two to four years. The ability of the telecommunications industry to secure the necessary financial resources will be the largest factor in whether a healthy competitive market will emerge from what I now believe is the most favorable regulatory environment Arizona has seen.

Telecommunications plays a significant role in the further economic development of Arizona. As our economy grows, it is imperative that a wide range of affordable and reliable services are available to our business community and residents. In the past, I have strongly encouraged the deployment of advanced services to all areas, urban or rural, the deployment of which I consider a priority. The Commission needs to further utilize the Rural Telecommunications Task Force ("Task Force") to help identify where a business case exists for the industry to begin expanding service into areas where advanced services are not currently available. The Task Force could also be utilized as a vehicle to better coordinate sound development practices and create a state-wide strategy for bringing large businesses that are heavily dependant on telecommunications to these areas.

However, the actions of the Commission and their overall effect on the progression of advanced services to Arizonans cannot be viewed in a vacuum. In order for advanced services to become more widespread, the legislature must create the appropriate tax incentives to assist the telecommunications industry in building the infrastructure, while at the same time the industry needs to find sources of capital to fund the expansion.

I agree that a disparity exists in the availability and quality advanced telecommunications services among various social, cultural, geographic and economic groups. I also believe that this disparity should be reduced as much as practicable so that as many Arizonans as possible can enjoy the benefits of the vast array of advanced telecommunications services currently available. Although these disparities exists on many different levels, I believe that the rural communities have the greatest level of disparity and we should strive to bring enhanced broadband services to those areas as soon as possible.

During my 6 years as Commissioner, I have taken many steps to help bridge the "digital divide". In particular, I voted in favor of ordering Qwest to invest over $800 million in infrastructure in Arizona as well as the wholesale price docket which reduced the cost of accessing the ILEC's infrastructure by CLECs who provide service to consumers, including advanced services. Continued emphasis on capital investments in our rural and semi-rural areas by the industry will remain one of the important issues I will focus on while on the Commission.

The definition of Universal Service, in the context of the Arizona Universal Service Fund ("AUSF"), is the development of infrastructure to bring service to under-served areas within Arizona. The biggest obstacle to bringing advanced telecommunication services to areas where they are not currently available is the cost of infrastructure. Under this definition, funds should be available for the deployment of these services to these areas. Of course, the AUSF can only play a limited role in this endeavor, but even now it is tremendously under-utilized. While on the Commission, I will continue to encourage any telecommunications provider interested in deploying services (including advanced services) to utilize the AUSF in conjunction with its other funding sources.

Under the current regulatory environment the Corporation Commission has no jurisdiction over internet applications, including transfers of electronic data. The Commission can only play a limited role in presIrving and protecting the integrity and safety of our electronic data. However, with respect to the data that is collected and maintained by the many companies the Commission does regulate, the Commission can take steps to help protect Arizonans. For instance, I believe that it is possible to initiate a rule making procedure to require that all utilities store customer data in ways that prevents unauthorized access (i.e. mandatory state of the art firewalls, internal networks without access to the internet, or offline protected data storage). Depending on the size and sophistication of the company, implementation in most cases could be accomplished with little cost or effort.

With respect to protecting the privacy of individuals against unauthorized use of personal data and information, I led the charge against Qwest at the end of last year when it announced its intent to institute an "opt-out" policy if you did not want to have your personal information shared with other companies. A recent decision from the FCC has concluded that States can, if they chose to do so, require any communication company to utilize the "opt-in" policy, requiring it to obtain proactive permission from any of its customers I will continue fight to maintain the privacy rights of Arizonans by supporting the "opt-in" policy for all telecommunications companies doing business in this state.

During the 6 years that I have been on the Commission, an enormous volume of companies have applied for, and received, CC&N's to provide telecommunications services to all or parts of Arizona. The process is not cumbersome, and is efficient as the parties make it. Because the Commission not only regulates telecommunications, but also regulates electricity, gas, water, railroad, securities, pipeline safety and, of course, corporations, resources are always strained, especially at times where large, complex issues are being considered (i.e. Qwest's 271 application, electric regulation restructuring, etc.). Of course the process needs to be as streamlined as possible. But, the Commission should not be judged on the volume of decisions it renders, nor the length of time it takes to process them, but instead on the quality of its decisions. The Commission's constitutionally mandated primary responsibility is to protect the citizens of this state and in doing so, some issues may take longer to resolve than others.

While there are many important issues that Commission faces over the next 2 to 4 years, I will limit my answers to issues related to telecommunications. The issues are not listed in any particular order of importance.

The first most important issue relates to competition itself. The Commission, through the process of reviewing Qwest's 271 application, has created an environment, which has never been better suited for competition to develop. The Commission will need to continue to monitor the progress of competition, mindful of the constantly evolving nature of this industry, to ensure that it continues on the right path. During this time, the Commission will be charged with making necessary adjustments, if needed, in a timely fashion, to best protect Arizonans.

A second important issue relates to the development and upgrading of infrastructure. Many communities are currently being served by antiquated systems which can hardly be utilized for POTS ("Plain Old Telephone Service") lines, yet alone advanced services such as high speed data. In order to remain attractive to industry, especially high tech industry, investments need to be continually made in Arizona's telecommunications infrastructure. The Commission will need to continue to require that all telecommunications companies intending on doing business in Arizona, must also invest in its infrastructure, state-wide.

Finally, the third important issue facing the Commission is the stability of the industry itself. Telecommunications giants, such as WorldCom and Global Crossings have filed Chapter 11 Bankruptcy protection. Over the past two years small Competitive Local Exchange Carriers ("CLECS") have closed their doors at alarming rates. Where the nation's economy has generally suffered throughout this time, the telecommunications industry has been particularly hard hit, and has not yet shown signs of recovery. While protecting Arizonans from high rates and unreliable service is the primary duty of the Commission, it also needs to be mindful of the industry's need to remain viable and to facilitate growth. As such, the Commission must make sure that its actions do not have the unintended consequences of furthering the instability in the industry.