Good afternoon. My name is Sia and I will be the conference operator today. At this time, I would like to welcome everyone to the EMBARQ Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions]. Thank you. At this time, I would like to turn the conference over to Trevor Erxleben. Sir, please go ahead.

Thank you. Good afternoon and thanks everyone for joining us for EMBARQ Corporation's third quarter 2007 investment community update. With me today are Chairman, Chief Executive Officer Dan Hesse and Chief Financial Officer, Gene Betts. In addition, Tom McEvoy, President of our Business Markets group and Harry Campbell, President of our Consumer Markets group will be here for the Q&A session at the end of the call. Before we get started, there are a few very brief but important items I would like to bring to your attention. First, if you've downloaded the third quarter presentation from our website, please turn to the cautionary statement regarding forward-looking statements on slide 2. That slides indicates our comments today will include forward-looking information and expectations that involve a number of risks and uncertainties which may cause actual results to differ from our expectations. With that in mind, I would strongly encourage everyone to review our SEC filings which include a detailed discussion of the various risks and uncertainties. Second, during our remarks today, we will be referring to certain non-GAAP measures. To see a reconciliation of those measures to the appropriate GAAP measures, please refer to either slides 12 and 13 of the presentation or the definition section of our earnings release which is also available on our website. Okay. With those two points covered, I will go ahead and turn the call over to Dan so he can share his thoughts on the third quarter.

Thanks Trevor. EMBARQ delivered another solid quarter. So let me begin by stating that we are maintaining the annual forecast which we raised last quarter for revenue and operating income, and on top of this, we are further improving our outlook for 2007 capital expenditures. In spite of more challenging economic conditions than we faced a year ago, our improved marketing effectiveness and focus on innovation led to a more favorable year-over-year revenue trend once again. As you can see on slide 4, our telecom revenue this quarter of $1.473 billion was only $8 million shy or 0.5% of the $1.481 billion we achieved in the third quarter of 2006. In our consumer group, we again saw record growth in average revenue per household that we call ARPH, an increase of 7% year-over-year to more than $54. Similarly, third quarter attachment rates, an internal measure of the percentage of the new home phone customers who subscribe to additional services such as high-speed Internet, dig [ph] video and calling feature packages reached the highest levels we have seen since our spin off. Offsetting the growth in ARPH or ARP is the ongoing decline in access lines. In total, access lines declined by 126 000 this quarter, 7000 more than a year ago. As we indicated last quarter, line losses are being impacted somewhat by the slowdown in certain factors of the economy. And absent that impact, we believe access line losses would once again have been lower than the year ago. Again, this quarter we saw an increase in consumer competition from cable companies as cable VoIP expanded from roughly 55% of households in our operating area a year ago to the upper 60% range at the end of Q3. However, cable companies haven't been as effective competing in the business…

Thanks Dan. I'll begin with an overview of third quarter revenue on slide 7, which, as Dan indicated earlier, was slightly lower than a year ago. In total, revenue declined 0.7% to 1.59 billion while telecom revenue declined only 0.5% to 1.47 billion. In our consumer markets group, the percentage decline in revenue this quarter was the least it's been since our spin off last year. Although access lines continue to decline, the impact was largely offset by strong growth in average revenue per household. Continued growth in ARPH or ARP, as we call it, is key to our future performance, which is one of the reasons we are so focused on product and service innovation. Dan described some of the things we have recently introduced text to landline functionality, content packages available to our high-speed Internet portal, advanced computer support for HSI subscribers. In addition to increasing the value we provide to our customers over time, we expect these and other new products and services to make increasing contributions to ARPH. In wholesale markets, revenue declined modestly year-over-year. Special access growth nearly offset the decline in switched access this quarter. Another growth area within wholesale that people aren't always familiar with is communication services for correctional facilities. EMBARQ is the exclusive communications provider for facilities in four states. In addition to these statewide contracts, we provide communication services to a number of county institutions. In total, this business represents nearly $50 million of our wholesale revenue and is growing at an upper single-digit rate. In our business markets group, data, HSI and wireless continue to drive relatively consistent revenue growth. One particular area within business I would highlight is the government sector which generates more than $150 million in annual revenue. Historically, we have had a strong position with…

Thanks Gene. While the operator opens the line for questions, I would offer my usual friendly reminder about limiting multiple and multi-part questions to the extent possible. Looks as if we have about 40 minutes available for Q&A, so hopefully we can get to everyone who has a question. Sia, when you are ready, would you mind reviewing the process for submitting a question before you introduce? Question And Answer

Yes, sir. [Operator Instructions]. The first question is from Chris Larsen with Credit Suisse.

Hi, thanks. I was wondering if we could talk a little bit about DSL and actually [ph] data trends. I know that you introduced a couple of rate plans. Could you talk a little bit about the migration of consumers of those rate plans and what you are seeing in terms of... DSL adds were up sequentially, the seasonality of it, but down year-on-year. Could you just talk a little bit about what you are seeing in terms of penetration overall in high-speed data? And then we'll just leave it at that.

Thanks Chris, Dan here. I am going to have Harry Campbell who is here with us who is the President of our Consumer division talk about that.

Sure. Chris, let me try to click these off in order. The first thing you talked about was the intro of I think our unique offer last year in April where we started talking about price won't go up for as long as you have the service combined with some lowering of prices, but basically simplifying our offer. What we have done over the last I guess about 16, 18 months is not only sell those new prices, but offer our customers the opportunity to move to that. A vast majority of our customers have taken up on that. And we have offset some of the price declines that were part of that with a lot of speed upgrade. So we are very pleased with the overall ins and outs and acquisition of the offer we started last year in April. Sales remain very strong. Right now, churn has ticked up a bit more than we would have wanted. So from my standpoint, I feel like the introduction of the 768 speed, which came out just in the last 6 or 8 weeks, is going to help us. I think there are folks that are still determining whether they want to come into the category from either no broadband or dial-up, and I think having that 768 helped. But also, I'll say book ending that on the other end, gamers or high-end users in the 10 meg, which we have currently available in Las Vegas and expect to roll out more broadly next year is going to help us with the higher price point. So all in all, our sequential move from 2Q was nice. As you said, we are down versus year ago, but I think the 'price for life' that we put into place last year combined with the continued sales momentum has about... we are fairly pleased with where we are.

If I can ask a follow on, do you have any plans to do a DSL-only offer, or something where you bundle just DSL and wireless? You brought out the gamers, and I'm just sort of thinking of that 20-something year old might not have a home phone. Any thoughts on those --

Chris, this is Harry again. I'll take that. At this point, we don't plan on offering that option. We are looking carefully at it. We are constantly evaluating the economics. And one of the things we really would like to do is always have the same offers available to new and current customers. That's just a fundamental way to treat customers and is a marketing principle that we are operating under. And therefore if you do that, you have to ask yourself what do you do with your embedded base. Right now, it's not part of our plans.

Thanks a lot.

Thanks Chris.

Your next question is from Jonathan Atkin with RBC Capital Markets.

Yes, good afternoon. On wireless, as you look at the revenue stream, can you give us a sense of the breakdown between business versus consumer as well as data versus voice?

Would you repeat that? You were clipping. You said with respect to wireless.

On the wireless revenues, I wondered if you can give us a flavor for how that splits out between business versus consumer as well as between data versus voice for wireless.

Jon, the revenue number is not something we provide. But you can see the subscriber numbers in our press release. Of the 108,000 subscribers we have, 98,000 are consumer and 10,000 are business. So the ARPUs will be a little different, but that will give you a sense for the breakout. And then on the data versus voice piece, again, that's a number I don't think we have handy right now. So we'll probably defer on that question if that's all right.

Okay. And then as you look at the broadband, the DSL growth, do you feel like you gained or lost share versus cable this quarter in your operating territories?

This is Dan. We had been gaining share on cable. Overall, cable has more broadband share than we do. I think kind of at a high level they have roughly a 60:40 share to us of customers that have broadband. And I'd say probably somewhere in the range of 70% of households have some form of broadband. In the last quarter, I'd say it was pretty even between cable and us in terms of new adds.

And then finally, any kind of updated thoughts strategically on M&A?

No, nothing to discuss there.

Thanks Jon.

Thank you.

The next question is from Michael Rollins with Citigroup.

Hi, good afternoon.

Hi Mike.

Just had a couple of quick questions. I will try to combine this into one though. Since Dan in your opening comments you said the word stock. I figure, before we turn it over to Gene, I figure I had to ask about how you are weighing paying down debt, which it looks like you did again in the third quarter, versus the possibility of doing a share repurchase program? And within that context, as you look at your assets, if there any possibility of selling the... well, this used to be the North Supply business, your products business, which doesn't really create a lot of cash flow but might have value to some other entity? Thanks.

I'll let Gene answer that. And there was a... it was Freudian slip when I said stock there at the end, but go ahead Gene.

Okay. Yes, hi Mike. On the first question, I think as we've maintained before, we constantly review our capital structure of what will be the best balancing of all the interest. So that's something that's under continual review by management and the Board. On the second, I would say that just generically, we also continually review assets to determine if they have the appropriate value and if they are earning appropriately. If they are not earning appropriately, we either need to increase that or take other actions. So I mean that's just something we would take, and that paradigm would apply to anything in the business.

Thank you.

Thanks Mike.

The next question is from Jonathan Chaplin with J.P. Morgan.

Thanks a lot for taking the questions. It looks like your consumer access line losses have stepped up quite a lot since last quarter. So looked like just looking at the consumer lines, they were fairly steady last quarter at around 7.7%, then they stepped up quite substantially. Can you break down how much of the acceleration in line loss in that piece of the business is driven by economic factors or growth factors as opposed to the step up in competition from cable competition? Thanks.

Sure. This is Harry, Harry Campbell in the Consumer Markets. I am trying to look at the percentages you were quoting. It was Jonathan, right?

Yes.

Right now while cable is in the high 60s as a percentage of overlap from a voice standpoint, the cable... what I am going to call is cable competitive losses that we measure, they continue to tick up somewhat because we get more competition obviously. I think last year we quoted in the mid 50s as a percentage of overlap. But that is frankly not the big driving factor. Moves in and out of territory and are huge as well as economic non-pay. And on a percentage basis, you would see that the competitive losses that we have are actually a minority of our disconnect whereas moves and economic are a much larger factor. I don't think that we talk about those percentages specifically when we break it out. But we analyze those and look at the trends obviously on an ongoing basis.

One thing I would add is I think the most important, because our business is very seasonal because of move. You really have to look year-over-year to get meaningful trends, if you will. Sequential trends really are pretty meaningless in... when you are talking about access lines. You really want to look at year-over-year, for example, Q3 to Q3.

So if I could just follow up on that, the economic... if you look at a churn rate of just... I am throwing out like 2.5% maybe, if economic non-pays has driven up that churn rate, how much has it driven it up by? Has it sort of increased the churn rate by 2.5% to 3%, or is it much smaller than that? If you could just give us an idea of how big an impact economic disconnects is having, that would be helpful.

Jonathan, this is Trevor. As Dan indicated in his remarks, it's having some impact. We don't think it's dramatic. In fact, it's hard to be too precise about describing it. So some of it's competition, some of it's moving, some of it's the economy. But we feel pretty good about the trajectory we are on right now, which is why we reiterate the access line guidance. So we'll probably just leave it at that.

Okay, thank you.

Thanks Jon.

The next question is from David Barden with Banc of America.

Hey guys. Thanks for the question. Maybe just if I could, Trevor two, since everyone seems to be getting two. One is just to follow up a little bit on that. Maybe on the econ side, the economic non-pays, are you seeing kind of a steady drumbeat on the economic effects or are you, over the course of the quarter and the course of this quarter versus last quarter, seeing an acceleration which is kind of mounting and maybe going to put some incremental pressure on the coming quarters at the margin? And if you could just kind of tell us when someone stops paying, like when do they get off the books? If I could ask a separate question, which is, Dan, just back to a theme that we have talked about before as you are on track to make maybe $55 million in wireless revenue this year, you are budgeting $80 million in dilution, which implies $135 million of expenses out the door to support that initiative. And obviously, if you can point out, a minority majority of the losses are really to competition, it's relay about moves and the economy, and wireless doesn't really necessarily seem to affect that. And so is there... your conviction level is pretty high, has always been high on this thing. But I was wondering if you could kind of just reiterate [ph] why you think it's worth $135 million going out the door to do what you are doing here in reselling wireless. Thanks a lot.

Well, first of all, as you indicated, it is generating revenue. So I don't think... so I would agree with you. There is $80 million of investment. There are a lot of... for example, there are a lot of intangible benefits with respect to brand position and what have you that is proving to be very important to the company, the kinds of awards, the way we are perceived in the marketplace and what have you. It also, and again we just launched about a week ago our Integrated Calling Features nationally, which is really what this has all been about, which is the ability for our customers to kind of have any phone answered anywhere, to be able to turn off their wireless phone as soon as they walk into their house, into their office, all those integrated features that we've been winning awards on. So we're going to see how this pans our over time. It's a good thing to push on because we clearly are taking some risk, we are making an investment. We believe it will be a good investment in the long term. What it does is it fundamentally changes the dialogue between our customers and us with respect to cable because they don't offer wireless and with respect to standalone wireless because they don't offer wireline and can't integrate that service with the home service. So it is our only true differentiating offensive weapon in the marketplace. We are not going to just sit here and get attacked from our competitors. We are going to go after them with something better and different. So you are right. There are... like if we were launching as a standalone company, I mean when I launched the PCS division at AT&T Wireless, of course, there was dilution when you are launching new markets. It just kind of goes with the territory. So we believe it's a very prudent investment. It will be a longer term investment. But it is one that we think we have a strong business plan over time and it will be retentive to the landline. That's fundamentally why we are in it to differentiate us in some way. So that's question one, and I will... well that was actually your question two. I'll let Gene answer your question one, David.

Thanks.

Hi Dave, it's Gene Betts. On the... maybe I can take this to a little higher level and give you maybe three perspectives on the economy. I guess first, when one thinks about valuing companies in a long term NPV, of course, conceptually, when we are discounting 100 years or 50 years of cash flows, inherently there is recessions and boom periods in that. So I think fundamentally, assuming we are in somewhat of a soft economy and maybe just soft in some sectors like retail, it seems to us that fundamentally NPVs are probably not largely impacted by things that are just cyclical occurrences over time. Secondly, as mentioned in my comments, we do think that telecom is somewhat resistant because, and part of it, as you know, is the long-term investment cycle. So if we are not cooking up a new customer because of the slow down in the real estate for example, that's maybe $1500 rough average. It can vary widely. But just say it's $1500, $2000 a customer. And then if you think if you are charging them $40 or $50 a month after-tax, it takes them a long time to earn that back. So, economically, one probably shouldn't expect to see a big impact, and that's why I said earlier it could actually even be positive shorter term or we could save more in CapEx than what the impact of not having as many customers would be. Finally, on bad debts, if you look at the public filings, I think what you'd see is we've been running about $20 million a quarter on bed debts, largely customer because we have relatively low bad debts in business and wholesale. In the third quarter, that's up to about $30 million, and that's inherent in our guidance that we are providing at that rate. So you can see there has been some impact, certainly not insignificant, but I think that gives you some bounding on it.

And do you think that --

David, we really kind of need to move on.

Well, is that just... or do you think that's a fair level, Gene? You think we are kind of at run rate levels now?

Well, I think then you get to the question of the whole economy, which I am not an economist. And I think that's something we just have to continue to monitor as the economy goes forward. We are all kind of guessing as to what the rates will be in the future.

Sorry, Trevor. Thanks.

Great. Thanks.

The next question is from Michael Nelson with Stanford Group.

Yes, thank you for taking the question. Could you quantify some of the items that your benchmarking initiatives have uncovered? And related, where are you in the process of restructuring your workforce management system and changing the way you dispatch your technicians? And can you provide maybe some color on the margin expansion opportunities there as it relates to reduced expenses and revenue opportunities from upsell and customers in the field? Thanks.

Okay. This is Gene. I'll take those maybe a little bit out of order, but, again, let me know if I don't hit all the questions. First of all, at a high level, I think we have told many of you that we think comparing ourselves, particularly to say Windstream where we are perhaps citizens that we believe... in the past, we have seen about a 300 basis point gap in margins that we think we, at a high level, we should be able to close. The gap is actually larger than that, but there is regulatory advantages they have that we don't have in the U.S. for intrastate access that accounts for the rest of it. As we've said, we believe the actions we've taken so far, we have closed about 250 basis points of that 300 basis point gap once they're up and running at full speed. And we would intend not to stop there obviously and to close that gap further. The benchmarking we have done has been done at a relatively detailed level within each area and within processes by area. And as Dan indicated in his comment we see continuing opportunity for that. I think realistically, it can take a period of a few years and is a never ending process. But we have things that we can work on, I think, easily for the next several years. I think you asked specifically about workforce management, which is one of our projects that's in process right now. It's not completed and I don't -- I have to say we haven't seen any meaningful impact from that yet, but would expect to in the future.

Okay. Thank you very much.

Your next question is from David Janazzo with Merrill Lynch.

Good afternoon.

Hey David.

We have got some changes at Sprint. Can you remind us where you are with your temporary service agreements with them and where it puts you in the future?

This is Gene. On the temporary service arrangements, there were a high number of those. And distinguish those from what we would call continuing service arrangements like long distance and wireless of which there are 5 or 7 of those that go on for 5 to 7 years. But on the TSAs, we are out of most of those -- and there was a high number like 170. We are out of a great number of those. We have really two major ones that we are transitioning off of this year, printed mail, which we are well along in transitioning. And then the last one will be the long distance billing system and rating system works well along on that. So we expect by two years from the spin off date, which would be May 17 of next year to be totally out of the TSAs as was originally planned.

Thanks.

Thanks.

Your next question is from Todd Rethemeier with Soleil Securities.

Thanks. Good afternoon guys.

Hi Todd.

Could you give us a little bit of color on how the access line trends were over year-over-year throughout the month? Did you... was September of '07 higher or lower than September of '06?

Again, Todd, sort of a quarterly reporting structure, you get seasonal fluctuations month to month. But again, we don't see anything in the trends that would cause us to change our guidance at this point. So that's probably the best way to answer that question.

Okay. Thanks.

Thanks.

Your next question is from Simon Flannery with Morgan Stanley.

Good afternoon. Thanks a lot. I wanted to follow up on the 10 meg offer you have in Las Vegas. It's similar to what we heard Qwest saying about rolling out higher speed products to a part of their base. Can you help us understand what percent of your customers are able... you think will be able to get that 10 meg product in the next year or so and are you considering perhaps a special additional sort of broadband spend to get that fiber to the node get sort of 20 megs at least in the major cities where you are likely to face higher speed offerings from cable down the road? Thanks.

Yes, hi Simon, Dan here. About 40% of our customers would be able to get a 10 meg speed offer, and any, if you will, upstream CapEx requirements are in our overall capital budget to provide that. So that's in not only our CapEx guidance for this year; it will be in our CapEx guidance for next year when we give that to you. But obviously, when you do increase the speed available in the last mile additional, if you will, backhaul investments are required in the core of the network. But that again is... we have contemplated that and that is all in.

Any early results from Las Vegas?

Harry?

Yes, Simon, this is Harry. We have actually sold more than we had anticipated early. We have not put a lot of marketing pressure in the market yet, and frankly we are pleased with what's happening. And I think as a result of that, it kind of gives us more want to drive to get to the 40% quicker, because the 40% that Dan referenced actually is once we get 10 meg deployed across the United States. So going real well on the consumer market early. Tom, you have anything you want to add to that?

We rolled it out also in the business market space, and we definitely seeing sales in that speed. As well as similar to what Harry talked about before, we are seeing customer definitely migrating up scale in speed. So the majority of our sales now are at least 1.5 and above up to the 10 meg in business in the server [ph] and small biz market.

Thank you.

Thanks Simon.

The next question is from Tim Horan with CIBC World Markets.

Good afternoon guys. Thanks a lot. Two questions. On the business side, you seem to be doing real well. Can you talk about why you think that is and what are your plans maybe if you are going out of region a little bit more? And then secondly, Gene, you seem to be implying that your EBITDA margins kind of expand here, and you've obviously done a lot of studies on it. Do you think this is kind of a low point for EBITDA margins so we can continue to kind of trend up over the next couple of years under most economic scenarios? Thanks.

This is Tom McEvoy and I will start talking about the business market. After we spun off from Sprint, we had a real focus to become very powerful again in our marketplace, the geographies we serve. So put a lot of emphasis on getting in the right products in the market as well as a very focused sales team. And similar to what I've talked before, we are seeing a real demand for high capacity services and new IP type services. So we are seeing a lot of great revenue growth in that category, and net-net top line growth. So we have been really pleased with that. As well as customer satisfaction is a key piece here. And I think you are familiar with we announced earlier in the year that we had won the J.D. Power award up in the mid market large enterprise customer. So we are really being respected for our products, our service delivery and the approach we take in making sure our customers are served well.

And any thoughts about going out of region there?

At this point in the business market, we still have some business customers who we inherited after spin off that we had contracts with. But our focus is all really in territory at this point.

Thanks.

Tim, it's Gene. On the EBITDA margin question, let me answer that this way. I think clearly, we would anticipate increasing value because if you assume that your revenue per unit is relatively constant and if we are taking costs out then margin should increase. However, we do have some product mix items that will come into play. And of course if you think historically in telecom, first, in our case, you have take EMBARQ Logistics and set it aside because it's a very different business which puts about 300 basis points more on our margins. But then as you think about it, those 40 some percent margins are very capital intensive margins where we are spending roughly $800 million a year of CapEx. We probably increasingly will have products like wireless is a great example where we have no capital because it's an MVNO. So logically, one wouldn't expect to earn a 40% margin with no capital and we have others. I mentioned earlier in my script the correctional facilities which are very good pieces of business, virtually no capital, very low capital. But of course the margins are substantial, below 40%. So I think as time goes on, we'll just need to keep you informed because we are putting NPV positive business into the portfolio, but it has different margins because it has different capital intensity characteristics.

That's what I assumed. I just wanted to double check with you. Thank you.

Thanks Tim.

The next question is from Frank Louthan with Raymond James.

Great. I want to go back to something that you said in the script there earlier. You said roughly half of your CapEx is coming from newbuilds and new home constructions. I mean there seems to be quite a bit of a disconnect there because you're obviously not getting... does not appear you are getting a whole lot of incremental revenue. Would that imply that the cable company has been taking a tremendous amount of that new revenue? And I know you've gotten some relief in Florida, legislative relief in Florida and North Carolina, get some exclusive agreements for not having to build that CapEx. But is there any legislative thing you could pursue, or regulatory things to pursue to sort of minimize that. So it seems like you are spending a lot for very little revenue, which should imply not a lot of customers. And then on the SME market, could you characterize your sales effort say in Las Vegas? I mean quota bearing reps do you have there and what exactly are you doing to grasp [ph] the SME market? It seems like it's going pretty well for you. Thanks.

What was... Frank, SME in Las Vegas?

Yes, on the small medium enterprise market, you said it's going very well. You've said particularly... called out Las Vegas. Just if you could characterize what you are doing on that to go after those customers. Do you have quota bearing reps on the street or what exactly are you doing to continue to boost that line item?

Sure, I'll start with question two. This is Tom McEvoy again, the Business Market. We basically have quite a few representatives there, all quota bearing in the Las Vegas market. Of course, our tradition has been mostly up in the enterprise space since there are so many large customers there. What we have done is moved down small business also. So we do have feet on the street. We've also used some concepts where we call it our SWAT team where we bring in resources to be able to walk the street and knock on doors with our business customers and continue to hold on to those small business customers, very small business customers. So we definitely have executed a plan to have direct sales force. And I should add we've also expanded our indirect partner program where we work with value-added resellers who represent our product and sell end-to-end solutions including EMBARQ as part of their solution. So very focused activities in Las Vegas.

Yes, this is Gene. On the CapEx question, we said as much as or near 50%, I think probably 40% range... it would probably be closer in the 40%-45%. But as I mentioned earlier, there is a relatively long pay back on the conventional services. When you are incurring say $1500 to invest, you can't really expect to see an amount of revenue that's close to that. If you think about the average bill at maybe $50 and a 40% margin and then there is taxes off of that, it takes a while to earn that back. So I think there a league lag effect between the CapEx and the revenue.

All right. I think we have time for just one more question, Sia.

Your final question is from Tom Seitz with Lehman Brothers.

Yes, thanks for taking the question. I've got two, but I'll smash them into one. Dan, you've talked... this is a bit of a follow up here... you've talked about making it a priority to level the playing field with respect to taxes and fees with cable. And I was wondering... with the States particularly... and I was wondering if you could update us on any progress you have made in that regard and if you run into a wall there, would that make you want to throw your hat into the ring for the Sprint CEO slot given your name has been mentioned in a journal article. I thought maybe I'd see if we can get a comment.

Thanks Tom, I really appreciate that. But seriously I will take the second one first. I am very, very confident in EMBARQ's prospects. I like being here and I plan to stay here and execute our plan for continuous improvement going forward. Now I will admit that every once in a while after I come back from Washington DC I am frustrated enough to wonder why I am doing this, or the state capital. But seriously, we are making progress. I mean it does take a long time. As you may have noticed, we got forbearance with respect to special access, which gives us greater parity with... because that's really what this is all about. It's parity. I think you framed the question correctly with respect to our competition. So it allows us to in essence de-tariff our packet-based broadband products, which will make... give us more pricing flexibility, let's us be a lot more competitive. We are making progress. We think we will possibly will make some in [indiscernible] traffic, in terms of intercarrier compensation. Some of the other things that were raising their head earlier that were potential concerns, look like they are becoming less of a concern. So on the regulatory side, we are making progress, but it does... it takes time. So stay tuned. Things are improving rather than getting worse on the regulatory front and we are getting closer to parity, but it takes some time.

At the state level as well?

At the state level as well.

Okay. Great. Thank you very much.

Thanks Tom. As indicated, that will have to be our last question today. If you would like to listen to a replay of this call, please visit our website, investors.embarq.com. Thanks again for joining us and have a good evening.

Ladies and gentlemen, thank you for participating in today's EMBARQ third quarter earnings conference call. You may now disconnect.