Witness Testimony

1 Introduction

My name is Cristina Lambert and I am President and Chief Executive Officer of Puerto Rico Telephone. I assumed my current position in November 2003. I originally joined PRT in August of 1999. My responsibilities at that time included managing the company's sales, marketing and network operations functions. I have been in the telecommunications industry for 30 years serving in various capacities at Contel and GTE.

I want to thank you for inviting me to appear today at this hearing regarding the E-Rate program. I am pleased to have the opportunity to address these issues that are critically important to me, Puerto Ricans and to this nation.

PRT is a diversified telecommunications company operating in the Commonwealth of Puerto Rico. Puerto Rico Telephone has been committed to providing modern, quality telecommunications services to as many Puerto Ricans as possible. PRT is the most technologically advanced and most reliable telecommunications company in Puerto Rico and the Caribbean. PRT's network is 100 percent digital with over 75,000 miles of fiber optic cable serving approximately 1.6 million wireline and wireless customers and we continue to invest in our infrastructure. Over the past five years we have invested over $1.2 billion in our network.

PRT places tremendous emphasis on providing modern telecommunications as a means of improving the economic welfare of Puerto Ricans and the overall business environment in the Commonwealth. In particular, PRT is committed to improving and enhancing educational programs on the island. Beyond the company's direct contributions to the universal service fund, PRT has earmarked millions of dollars to scholarships, internships, work-study programs, research grants and Internet community centers for the people of Puerto Rico.

From its inception, PRT has fully supported the E-rate program and its objective of ensuring Internet access to public and private schools in Puerto Rico. This project has been a focal point of the company's mission of "building the foundation of the new Puerto Rico."

2 PRT's Participation in the DOE's Internet Access Projects

In 1998 the Puerto Rico Department of Education began an Internet Access project for Puerto Rico's public school system, originally called EDUNET but later named RE-EDUCATE. The plan originally called for the provision of Internet access to approximately 750 public schools in Puerto Rico (later denoted as the Phase I schools) and ultimately for access to over 1500 schools (the new schools being denoted as the Phase II schools). From 1998 to 2003 PRT was a vendor for the DOE in what has been termed Years 1 through 5 of the E-rate program. Our duties as a vendor were specified by the DOE in accordance with the Department's procurement process and as approved by USAC's Schools and Libraries Division. I have attached a chart, which sets forth the responsibilities of PRT, another vendor, DRC, and DOE for years 1 through 5.

During those years, under the terms of the contracts, PRT provided broadband access (T-1, ATM), to connect each of the Phase I schools to a central ATM node located at the DOE's premises. PRT also sold and provided maintenance to communications premises equipment (CPEs) - routers, not computers - for all Phase I schools. It is important for this body to understand that PRT was not in charge of this project. It was a vendor who was contractually obligated to provide services pursuant to DOE or, in some years, to DRC as a subcontractor.

In each year, DOE was responsible for the overall project management and for providing an adequate electrical infrastructure and environmental conditions for the reliable operation of the telecommunications equipment. Indeed, DOE had certified in each of the 470 forms it submitted to SLD during the life of the program that the Department was able to provide such oversight and infrastructure. In addition, DOE was responsible for training teachers, having computer equipment available and installed, and for providing "help desk" assistance. Necessary telecommunications equipment storage and inside wiring was the responsibility of other DOE vendors. Therefore, during this five-year period of this E-Rate project PRT was contractually responsible for:

1. A broadband connection to each of the Phase I schools to the central ATM node located at DOE central offices providing the PRT-installed routers access to the Internet.

2. Broadband connections to each of the Phase II schools (the other half of the 1500 schools), as a subcontractor to DRC. In each case, before billing could begin this vendor accepted the connection.

3. The installation, configuration, and maintenance of routers in approximately half of the over 1500 public schools in Puerto Rico, the Phase I schools, and at the central site at the DOE main office.

3 PRT's Performance in the RE-EDUCATE Project

In each year of the Program, PRT met and exceeded its obligations as set out above. Underscoring PRT's continued dedication to the E-Rate program and the ultimate successful operation of the RE-EDUCATE network, PRT also performed a number of additional tasks beyond those for which it was contractually obligated. For example, when equipment was damaged due to problems attributable to the school's power deficiencies and cabinet placement and design - even though PRT had previously pointed out the placement and design problems - PRT routinely replaced equipment that was outside of the scope of the maintenance contract and did so free of charge. In all years, PRT routinely met with DOE personnel to highlight areas of potential improvement and to work towards solving problems with the network and specific schools.

During Year Four of the project a new administration took office in Puerto Rico. PRT worked hand-in-hand with the current DOE administration to demonstrate that, under the proper environmental conditions, the RE-EDUCATE network could provide consistent high bandwidth Internet service to the schools. To that end, PRT volunteered to invest over $1.2 million of its own time and resources to "Project 400". This project's objective was a top-to-bottom evaluation of end-user Internet Access capabilities of 400 specific Phase I schools. In each of these schools, PRT performed electrical and internal wiring infrastructure recovery work, provided Uninterrupted Power Supplies (UPS) to protect PRT's provided equipment and installed larger cabinets in appropriate locations. In addition, during 2002, PRT loaned the DOE approximately 300 personal computers to enhance the ability of the Project 400 schools to make use of Internet access.

In Year 5, the DOE announced that PRT had been awarded a "turn key solution" contract. Shortly thereafter, the DOE and PRT demonstrated that: the whole RE-EDUCATE network could be stabilized. Specifically, PRT installed a network operations center staffed with PRT personnel on DOE's premises to monitor network performance and dispatch personnel to remedy any problems. In addition, PRT trained over 30 newly hired DOE technical support personnel to assist schools in internal troubleshooting, greatly expanding available support services.

Thanks to the substantial effort put forth by PRT, by the end of 2002 PRT had firmly established that Phase I schools had reliable Internet service. At the same time, the DOE asked PRT to determine if Phase II schools could be cost-effectively integrated into the overall RE-EDUCATE network. To that end, PRT established that integration was feasible through the successful completion of a pilot program at three schools in May 2002. We have a video, which we will be pleased to provide you, exploring these efforts at one of the schools, the University Gardens School, that highlights the accomplishments achieved in meeting the DOE's challenge.

During Years 4 and 5 (2001-2003), the DOE awarded contracts to continue its RE-EDUCATE network but the SLD did not fund the DOE. PRT, as a contractually obligated service provider, could not unilaterally terminate services to the DOE. Importantly, the DOE never requested that we terminate the services. On the contrary, the DOE asked us to continue to provide service even though we were not being paid. PRT continued to provide service, in good faith, throughout the term of the contract. But with no assurance of payment we were forced to terminate services to the DOE on June 30, 2003 when the Year 5 contract expired.

4 Concluding Remarks

In conclusion, PRT has met and exceeded all of its contractual obligations in providing equipment and services to the Puerto Rico public schools and in many cases went well beyond those obligations, demonstrating our clear commitment to the educational and social goals of E-Rate. Admittedly this project was not an unqualified success; I believe that Project 400 proved that the RE-EDUCATE network as conceived by DOE and Congress and implemented by DOE selected vendors could provide high speed Internet access to the schoolchildren of Puerto Rico.

Indeed, PRT has seen first hand, as an E-Rate vendor in a different, non-Reeducate, project at over 100 private schools in Puerto Rico, that reliable Internet access can be successfully utilized by the educational system - more than 60,000 students and over 4,000 teachers at private schools have benefited from this program.

The facilities in place in Puerto Rico's public schools today are key building blocks for providing the students in the Puerto Rico public school system with reliable high speed Internet access in the future. We are eager to assist the DOE in completing this project, assuming we can agree on terms, which meet both parties' needs and ensure timely payment of PRT's contractual charges.

I would be happy to answer any of your questions.