FairPoint Communications 2004 Annual Report Download - page 65

at law or in equity, in any court of competent jurisdiction, against any stockholder, with a view towards obtaining such information or
preventing or curing any situation which would cause an inconsistency with, or violation of, any provision of any applicable communications
law.
Risks Related to our Business
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Our business generates revenue by delivering voice and data services over access lines. We have experienced net voice access line
loss, adjusted for acquisitions and divestitures, of 4.7% for the period from December 31, 2001 through December 31, 2004 and 2.9% for
the period from December 31, 2003 through December 31, 2004 due to challenging economic conditions, increased competition and the
introduction of digital subscriber line services. We may continue to experience net access line loss in our markets. Our inability to retain
access lines could adversely affect our business and results of operations.
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As an incumbent carrier, we historically have experienced little competition in our rural telephone company markets. Nevertheless, the
market for communications services is highly competitive. Regulation and technological innovation change quickly in the communications
industry, and changes in these factors historically have had, and may in the future have, a significant impact on competitive dynamics. In
certain of our rural markets, we face competition from wireless telephone system operators, which may increase as wireless technology
improves. We also face competition from cable television operators. We may face additional competition from new market entrants, such as
providers of wireless broadband, voice over internet protocol, satellite communications and electric utilities. The Internet services market is
also highly competitive, and we expect that competition will intensify. Some of our competitors have brand recognition and financial,
personnel, marketing and other resources that are significantly greater than ours. In addition, consolidation and strategic alliances within the
communications industry or the development of new technologies could affect our competitive position. We cannot predict the number of
competitors that will emerge, especially as a result of existing or new federal and state regulatory or legislative actions, but increased
competition from existing and new entities could have a material adverse effect on our business.
Competition may lead to loss of revenues and profitability as a result of numerous factors, including:
•loss of customers (in general, when we lose a customer for local service we also lose that customer for all related services);
•reduced usage of our network by our existing customers who may use alternative providers for long distance and data services;
•reductions in the prices for our services which may be necessary to meet competition; and/or
•increases in marketing expenditures and discount and promotional campaigns.
In addition, our provision of long distance service is subject to a highly competitive market served by large nation-wide carriers that enjoy
brand name recognition.
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The communications industry is subject to rapid and significant changes in technology, frequent new service introductions and evolving
industry standards. We cannot predict the effect of these
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