FairPoint Communications 2004 Annual Report Download - page 22

receipt of high-cost support. Although the written text of the Federal Communications Commission order has not been released, the Federal
Communications Commission has adopted additional mandatory requirements for Eligible Telecommunications Carriers designation in
cases where it has jurisdiction, and encourages states that have jurisdiction to designate Eligible Telecommunications Carriers to adopt
similar requirements. The Federal Communications Commission is still considering revisions to the methodology by which contributions to
the Universal Service Fund are determined. These revisions will be part of an overall rulemaking regarding Universal Service Support which
will be dealt with sometime in the next year.
In addition, there are a number of judicial appeals challenging several aspects of the Federal Communications Commission's universal
service rules. It is not possible to predict at this time whether the Federal Communications Commission or Congress will require
modification to those rules, or the ultimate impact any such modification might have on us.
Potential Internet Regulatory Obligations
In connection with our Internet access offerings, we could become subject to laws and regulations as they are adopted or applied to the
Internet. There is currently only limited regulations applicable to the Internet. As the significance of the Internet expands, federal, state and
local governments may adopt rules and regulations, or apply existing laws and regulations to the Internet, and related matters are under
consideration in both federal and state legislative and regulatory bodies. The Federal Communications Commission is currently reviewing
the appropriate regulatory framework governing broadband access to the Internet through telephone and cable operators' communications
networks. We cannot predict whether the outcome will prove beneficial or detrimental to our competitive position. In February 2004, the
Federal Communications Commission initiated a proceeding to examine the regulatory implications of voice over Internet protocol
technology. We cannot predict the results of these proceedings, the nature of these regulations or their impact on our business.
Environmental Regulations
Like all other local telephone companies, our 26 rural local exchange carrier subsidiaries are subject to federal, state and local laws and
regulations governing the use, storage, disposal of, and exposure to hazardous materials, the release of pollutants into the environment and
the remediation of contamination. As an owner of property, we could be subject to environmental laws that impose liability for the entire cost
of cleanup at contaminated sites, regardless of fault or the lawfulness of the activity that resulted in contamination. We believe, however, that
our operations are in substantial compliance with applicable environmental laws and regulations.
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We own all of the properties material to our business. Our headquarters is located in Charlotte, North Carolina in a leased facility. We
also have administrative offices, maintenance facilities, rolling stock, central office and remote switching platforms and transport and
distribution network facilities in each of the 17 states in which we operate our rural local exchange carrier business. Our administrative and
maintenance facilities are generally located in or near the rural communities served by our rural local exchange carriers and our central
offices are often within the administrative building and/or outlying customer service centers. Auxiliary battery or other non-utility power
sources are at each central office to provide uninterrupted service in the event of an electrical power failure. Transport and distribution network
facilities include fiber optic backbone and copper wire distribution facilities, which connect customers to remote switch locations or to the
central office and to points of presence or interconnection with the long distance carriers. These facilities are located on land pursuant to
permits, easements or other agreements. Our rolling stock includes service vehicles, construction equipment and other required
maintenance equipment.
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