TO: EDITORS, NEWS DIRECTORS

DATE: December 14, 2000

FOR: IMMEDIATE RELEASE

New Phone Company Coming to 38 Rural Areas
Regulators Expect Improvements to Come from Sale

PHOENIX - Residents of 38 rural areas will get a new phone company under a deal approved this week by the Arizona Corporation Commission. The Arizona Corporation Commission ruled on Tuesday that Qwest could sell 38 rural telephone wire centers to Citizens Utilities Rural Company. The two companies still must secure FCC approval before the transaction can be finalized. The sale will nearly double Citizens' telecommunications holdings in Arizona, adding about 160,000 access lines.

The following wire centers are included in the sale:

Ashfork
Benson
Bisbee
Circle City
Douglas
Dudleyville
Elgin
Fortuna
Gila Bend
Globe

Grand Canyon
Hayden
Joseph City
Kearny
Mammoth
Maricopa
Miami
Mt. Lemmon
Page
Palominas

Patagonia
Pima
Safford
Somerton
St. David
Stanfield
Superior
Tombstone
Tonto Creek
Wellton

Whitlow
Wickenburg
Willcox
Williams
Winslow
Yarnell
Yuma Main
Yuma Southeast

Citizens and Qwest will notify customers about the change in ownership, either through a billing insert or through a separate mailing. Additionally, Citizens will have a special phone number for customers to call if they have any questions about the change. It will be a local or toll-free call and the number will be in service for at least 18 months. Customers should watch their bills for information about the changes.

The Commission's decision followed many months of meetings, hearings, public comment sessions and discussions on how to improve phone service in rural areas. Citizens entered into agreements with the Residential Utility Consumer Office (RUCO), the Commission Staff, Cochise County and the cities of Bisbee, Yuma and Douglas. Each of these agreements outline specific provisions designed to resolve local phone service problems. Those provisions include:

• Citizens will adopt all of Qwest's existing rates and charges. The exchanges being acquired by Citizens will NOT be affected by any rate changes that may result from the ongoing Qwest rate case.

• Citizens will provide the same products and services that are available to Qwest customers now.

• Citizens will invest a minimum of $109 million over the next four years to improve the infrastructure and equipment in the acquired areas.

• In Wickenburg and Safford, Citizens will install fiberoptic cable to reduce congestion at key transmission points.

• Public safety service such as 911 will be provided just as it is now, without interruption or change.

• Citizens agrees to uphold the same quality standards as Qwest, which are spelled out in the Service Quality Plan Tariff. They will be subject to fines if they fail to meet the criteria outlined in the tariff.

• Citizens will open a public office in the Yuma area within one year after the sale closes. Citizens also agreed to deploy DSL service in the Yuma exchange sometime in the year following the sale. DSL service will be available in the Safford exchange within four years.

• Citizens will survey customers in the other exchanges to determine the level of demand for DSL. Based upon the results of this survey, DSL may be deployed in additional areas.

Upgrades to Qwest's Remaining Territory

Qwest committed to investing $56 million, to upgrade its infrastructure and make other improvements in the service areas they are retaining. Commissioner Bill Mundell sponsored an amendment to the Order that requires Qwest to invest $20.72 million over the next three years to upgrade or extend service in rural exchanges defined as those with fewer than 15,000 access lines. There are approximately 37 such exchanges remaining with Qwest.

Commissioner Bill Mundell was pleased with the passage of his amendment requiring Qwest to upgrade its remaining rural exchanges with proceeds from the sale. "I traveled all over this state, listening to phone service woes," Mundell explained. "Rural service must be improved. It's a shame it had to come to this before we had some real assurances that things would change."

Commissioner Jim Irvin pushed to ensure that Citizens would have an incentive to keep the number of new held orders at a minimum. Held orders are orders for new service that are not filled within the prescribed time frame. The resulting amendment provides that held orders existing at the time of closing will not be counted in the penalty calculations for the first 12 months. "Five days before the sale closes," Irvin explained, "Qwest will file a report showing how many held orders they have and proving that the number of held orders falls in the 'no penalty' range."

The final, unanimous vote followed nearly three full hours of intense discussion. Commission Chairman Carl Kunasek later said that he believes "this transaction is a win-win for Arizona's telephone customers. Substantial and important improvements will be made as a result of this Order."

This was the last Open Meeting chaired by outgoing Commissioner Carl Kunasek. He concluded the meeting by saying, "I value the experience I've had here and I thank you very much." Senator Marc Spitzer will begin a six year term as the newest Commissioner in January.