FairPoint Communications 2004 Annual Report Download - page 38

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We derive our revenues from:
•. We receive revenues from providing local exchange telephone services, including monthly recurring
charges for basic service, usage charges for local calls and service charges for special calling features.
• . We receive payments from the Universal Service Fund to support the high
cost of our operations in rural markets. This revenue stream fluctuates based upon our average cost per loop compared to the
national average cost per loop. For example, if the national average cost per loop increases and our operating costs (and
average cost per loop) remain constant or decrease, the payments we receive from the Universal Service Fund would decline.
Conversely, if the national average cost per loop decreases and our operating costs (and average cost per loop) remain constant
or increase, the payments we receive from the Universal Service Fund would increase. Over the past year, the national
average cost per loop in relation to our average cost per loop has increased, and we believe that the national average cost per
loop will likely continue to increase in relation to our average cost per loop. As a result, the payments we receive from the
Universal Service Fund will likely decline.
•. These revenues are primarily based on a regulated return on rate base and recovery of allowable expenses
associated with the origination and termination of toll calls both to and from our customers. Interstate access charges to long
distance carriers and other customers are based on access rates filed with the Federal Communications Commission. These
revenues also include Universal Service Fund payments for local switching support, long term support and interstate common
line support.
•. These revenues consist primarily of charges paid by long distance companies and other customers for
access to our networks in connection with the origination and termination of long distance telephone calls both to and from our
customers. Intrastate access charges to long distance carriers and other customers are based on access rates filed with the
state regulatory agencies.
•. We receive revenues from long distance services we provide to our residential and business
customers. In addition, our subsidiary Carrier Services provides communications providers not affiliated with us with
wholesale long distance services.
•. We receive revenues from monthly recurring charges for services, including digital subscriber
line, special access, private lines, Internet and other services.
•. We receive revenues from other services, including billing and collection, directory services and sale and
maintenance of customer premise equipment.
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