1. Telecommunication Issues in Indian Country ATIC Pre-Summit April 19, 2007 Navajo Nation Telecommunication Regulatory Commission

2. National Telecom Issues Telephone Penetration –76.4% - Indian Reservations –94.1% - National Average Access to Computers –26.8% - Indian Reservations –42.1% - National Average Access to Internet –18.9% - Indian Reservations –26.2% - National Average National Telecommunications & Information Administration, US DOC

3. Arizona Telecommunication Ranked 36 th in the nation in percentage of households with telephone service. “Telephone penetration within Arizona is significantly lower in the state’s more rural areas, including much of Arizona’s Indian reservation lands.” Statewide Economic Study 2002, Arizona’s Telecommunications Infrastructure, Prepared for the Arizona Department of Commerce by the Bureau of Business and Economic Research, NAU.

4. Telecommunication Challenges Internet Subscribers – Data unknown Limited Financial Resources Rural and Rugged Terrain Lack of Trained Technicians Rights-of-way Issues Jurisdictional Issues

5. Challenges on Navajo Nation There is $1 billion in salaries and wages earned on the Navajo Nation. Yet only $231,305,889 in retail sales are occurring on the Nation. Thus, 71% of the income earned of the Nation is benefiting non-Navajo communities. Navajo Unemployment rate is 42.16%. The poverty level on the Navajo Nation is 42.9%. Dual taxation continues to exist. Nation is asked to waive it’s tax first. Office of the Navajo Tax Commission, 2005

6. HB 2689 Reservation Telecommunication Legislative Study Committee –Identify methods to track tribal contributions to the state transaction privilege tax (TPT); –Identify an appropriate distribution formula that is modeled after the current city and state shared revenue formulas; –Identify an appropriate transaction privilege tax distribution process for tribal governments; –Recommend tribal telecommunications legislation that incorporates the state transaction privilege tax; and –Submit a report of its findings and recommendations to the Speaker of the House of Representatives and the President of the Senate on or before June 30, 2007.

7. Distribution of AZ TPT Distribution Base –25 % - cities Allocated among incorporated cities and towns –40.51% - counties Allocated among Arizona Counties –34.49% - gen. fund A.R.S. 42-5029 Non-shared –100% - gen. fund

8. County-City TPT Distribution

9. Reservation TPT Collections FY 2001FY 2002FY 2003FY 2004FY 2005FY 2006TOTAL 140,630.7746,627.4440,670.46179,540.90142,879.00192,483.00$742,831.57 919.3442,808.7637,547.7122,720.368,131.0014,432.00$126,559.17 925,655.85969,749.22980,917.431,301,315.63917,796.00969,386.00$6,064,820.13 96,217.771,776,390.231,681,186.891,668,171.71498,838.00296,093.00$6,016,897.60 57,838.46198,690.41388,149.95553,419.56599,505.00684,259.00$2,481,862.38 3,058,119.541,893,515.01645,525.28500,427.411,057,972.001,307,665.00$8,463,224.24 82,816.0968,501.1955,364.15188,679.5991,545.00100,791.00$587,697.02 11,561,553.4014,338,118.9715,648,234.6217,036,869.5316,192,010.0017,926,281.00$92,703,067.52 18,369.6269,679.3991,813.5356,116.1739,284.0064,971.00$340,233.71 1,195,481.191,518,226.241,188,850.243,340,998.405,018,203.007,790,178.00$20,051,937.07 33,612.1053,856.38118,772.9452,014.9476,192.0057,718.00$392,166.36 1,239,426.961,016,224.971,271,860.111,254,358.921,735,893.001,948,484.00$8,466,247.96 219,804.83397,080.89151,209.2863,715.3421,692.00172,847.00$1,026,349.34 39,946.1269,026.5555,369.6798,537.2781,430.00114,222.00$458,531.61 622,242.16923,436.73913,314.191,080,584.652,529,318.004,796,623.00$10,865,518.73 65,640.2510,489.1387,653.3187,998.1971,027.0022,518.00$345,325.88 19,358,274.4523,392,421.5123,356,439.7627,485,468.5729,081,715.0036,458,951.00$159,133,270.29 Arizona Department of Revenue

10. Reservation TPT Collections

11. Meetings Held 2 Ad Hoc Meetings - Summary Need for Telecommunication Infrastructure Educate, Build Support & Consensus Work with Tribes & Governor Arizona Department of Revenue Alternative Model for TPT Revenue Sharing Inter-Tribal Council of Arizona Informed Tribes and Request for Participation

12. Goals for RTLSC Meetings 2/16/07: Dialogue with Tribal Telecom & ITCA Introduce the Concept, Navajo & Hopi Presentations 3/27/07: Dialogue with State & Local Govt’s Counties, ADOR, ACC, etc. Meeting 3: Dialogue with Telecom Industry 2007 AZ Telecom Summit Meeting 4: Follow up w/ Tribes & Stakeholders Propose Alternative Models Meeting 5: Ratify Proposed Model For RTLSC Report

13. “Postcard to Congress” HCM 2007: Telecom; Native Americans –Recognize the rights of tribal governments and communities to exercise regulatory jurisdiction over telecommunication activities within the boundaries of reservations –Allocate sufficient Homeland Security funds to tribes for the development of telecommunication build-out necessary to mitigate various emergencies –Support and advance public safety implementation among tribes and communities through the provision of grants for the development of telecommunications and information technology capacities among various public safety providers –Encourage local governments to provide partnership opportunities the promote telecommunication services and that are mutually beneficial for the welfare of all state citizens

14. Contacts Navajo Nation Telecommunication Regulatory Commission –Ernest Franklin, Executive Director PO Box 900 Window Rock, AZ 86515 Phone: (928) 871-7854 Fax: (928) 871-7856 Web: www:nntrc.org Email: efranklin@nntrc.orgefranklin@nntrc.org Navajo Nation Communications & Utilities Department –Pearl Lee, Program Manager PO Box 2928 Window Rock, AZ 86515 Phone: (928) 871-7740 Fax: (928) 871-7741 Email: p.lee@citlink.netp.lee@citlink.net Native Policy Group, LLC –Ron Lee, Government Relations & Legislative Affairs Phone: (602) 319-4419 Email: ron.lee@nativepolicygroup.comron.lee@nativepolicygroup.com