TO: EDITORS, NEWS DIRECTORS

DATE: July 20, 2000

FOR: IMMEDIATE RELEASE

MEDIA ALERT: Clarification on July 18, 2000 ACC Decision

Matter: Investigation into U S WEST Communications, Inc.'s Compliance with Certain Wholesale Pricing Requirements for Unbundled Network Elements and Resale Discounts, Docket Number T-00000A-00-0194

This message is to clarify information contained in an article appearing in the July 19, 2000 Arizona Republic and subsequent news reports by other Arizona media.

Tuesday's action does NOT change residential rates and does not represent a $5.00 increase in rates for competitors. It actually represents a $3.02 decrease in the wholesale rate paid by competitors.

The Commission voted Tuesday to comply with FCC rules that require all 50 states to go through a process called "geographic deaveraging." Essentially, this means that instead of having one wholesale rate - the rate competitors would pay to lease the lines from another provider - all 50 states now must have at least three zones. The FCC requires this so that the rates charged to the new providers are more in line with the actual cost of providing service to those lines, called "unbundled loops."

Tuesday's action actually represents a decrease in the wholesale rate that Qwest charges its competitors for approximately 87 percent of access lines in Arizona. The statewide wholesale rate to lease lines from Qwest was $21.98. The Commissioners voted to reduce the rate to $18.96 for approximately 87 percent of the state. The remaining thirteen percent of Arizona's access lines would fall under one of two higher rates, which are more in line with the cost of providing service to those customers.

Approximately seven percent of the unbundled loops would fall under zone one with a charge of $34.94. Six percent of access lines would fall under zone two with a corresponding rate of $56.53. Zones are determined by the length of the loop or distance from central office facilities.

Qwest* was seeking a rate of $20.12 for 95 percent of access lines in the state but the Commission approved the lower rate of $18.96.

As mentioned earlier, an FCC ruling necessitated this change. The Commission is involved in a more complete and thorough examination of geographic deaveraging. Twelve parties are involved in this process, including several Qwest competitors and the Residential Utility Consumer Office. The rates approved Tuesday are merely interim rates until this process is complete. If the final deaveraged rates are lower that the interim rates, the difference will be refunded to the Qwest competitors.

*The docket was opened in January 2000, prior to the merger of Qwest and U S WEST. U S WEST provided testimony in the case.