Mr. Chairman and distinguished members of this Committee, I am here to tell a straightforward story and make one simple promise. Cox is committed, absolutely, to the provision of competition in the local telephone exchange marketplace. This has been and will continue to be a highly capital intensive and extremely complex undertaking. Going up against the entrenched incumbent local exchange carriers is decidedly not for the fainthearted. But Cox is succeeding. And Cox is in it to stay. In the process, Cox will have spent about $10 billion on such necessities as network improvements, incremental equipment, infrastructure hardening, call centers, and billing and collection systems. This year alone, we will spend about $2 billion. In addition, we have had to employ and train the people to operate this network with the reliability and quality of service that is the best in the business.

How is Cox doing? I’ll let our performance to date speak for itself. By the end of this year, Cox will be able to provide residential phone service to 75% of our customers in eight initially targeted market clusters. These markets comprise nearly half of our 6.2 million customers. As of March 31, Cox had 300,000 residential customers and 410,000 residential access lines. We handle about 1.2 million phone calls each day. Cox telephone is growing at 118% annually and is adding 4,000 residential customers per week. We already have deployed 20,000 route miles of bundled fiber, ten telephone network switches, and gas fired or battery network powering equipment.

The service Cox is providing is a life line service. In California, for example, we have been certified as a carrier of last resort. By 2004, almost 70% of our customer base will have access to Cox local phone service. On the business side, Cox now has 1,250,000 voice grade equivalent lines in service. Of Cox’s three new digital services (video, high speed data, and telephony), our new telephone offering is by far the most challenging and time consuming to deploy, market and operate, but we are inexorably moving forward.

Mr. Chairman, the next important question then becomes what do Cox’s customers think about Cox telephone service. They love everything about it. First and foremost, they like the price . . .10% less than ILEC service for a first line and about 50% off for a second in most markets. Enhanced services are up to 30% less expensive. Moreover, Cox customers like our state of the art technology, our quality customer service and the reliability of our network. And although 7% of our telephony customers take only phone service, the vast majority want two and three product bundles.

I should take a moment to comment about the future promise of Internet Protocol cable telephony. Next year, we will begin to test this new technology. There are questions to settle about scalability and powering of IP telephony. But Cox is confident that IP telephony will add great value for our customers, particularly in smaller systems where circuit switched systems are not as economic to deploy. We envision circuit switched and IP services will coexist in all of our networks.

Mr. Chairman, the final question is what should be the government’s role in fostering the speedier development of local exchange competition. I have five suggestions.

Encourage regulatory certainty in the marketplace by allowing the ’96 Act to work. Shift the FCC’s focus away from CLEC resale and UNE models which are failing in the marketplace and toward facilities-based competition which is succeeding. Dramatically increase penalties for repeated ILEC litigiousness which is setting an all time record. Provide facilities-based competitors with special fast track enforcement and much more aggressive economic sanctions against entrenched ILEC anti-competitive behavior. Prohibit abuses of pole attachment, right-of-way, and franchise requirements and local tax gouging.

Mr. Chairman, the prospect for telephone local exchange competition is in its infancy. Entrenched incumbents still control about 97% of the market. But if Cox is any example, the cable industry is poised to ensure that robust facilities-based competition will become a reality. Consumer choice will usher in a new era of better service, lower prices, and technological innovation.