FairPoint Communications 2004 Annual Report Download - page 66

changes on our competitive position, profitability or industry. Technological developments may reduce the competitiveness of our networks
and require unbudgeted upgrades or the procurement of additional products that could be expensive and time consuming. In addition, new
products and services arising out of technological developments may reduce the attractiveness of our services. If we fail to adapt successfully
to technological changes or obsolescence or fail to obtain access to important new technologies, we could lose customers and be limited in
our ability to attract new customers and/or sell new services to our existing customers. An element of our business strategy is to deliver
enhanced and ancillary services to customers. The successful delivery of new services is uncertain and dependent on many factors, and we
may not generate anticipated revenues from such services.
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 
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We depend on a limited number of suppliers and vendors for equipment and services relating to our network infrastructure. If these
suppliers experience interruptions or other problems delivering these network components on a timely basis, subscriber growth and our
operating results could suffer significantly. If proprietary technology of a supplier is an integral component of our network, we could be
effectively locked into one of a few suppliers for key network components. As a result we have become reliant upon a limited number of
network equipment manufacturers, including Nortel Networks Corporation and Siemens Information and Communication Networks, Inc. In
addition, when our new billing platform is completed, we will rely on a single outsourced supplier to support our billing and related customer
care services. In the event it becomes necessary to seek alternative suppliers and vendors, we may be unable to obtain satisfactory
replacement suppliers or vendors on economically attractive terms, on a timely basis, or at all, which could increase costs and may cause
disruptions in services.
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
We originate and terminate calls for long distance carriers and other interexchange carriers over our network and for that service we
receive payments for access charges. These payments represent a significant portion of our revenues. Should these carriers go bankrupt or
experience substantial financial difficulties, our inability to then collect access charges from them could have a negative effect on our
business and results of operations.
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We have grown rapidly by acquiring other businesses. Since 1993, we have acquired 30 rural telephone businesses and we continue to
own and operate 26 such businesses. We expect that a portion of our future growth will result from additional acquisitions, some of which
may be material. Growth through acquisitions entails numerous risks, including:
•strain on our financial, management and operational resources, including the distraction of our management team in
identifying potential acquisition targets, conducting due diligence and negotiating acquisition agreements;
•difficulties in integrating the network, operations, personnel, products, technologies and financial, computer, payroll and other
systems of acquired businesses;
•difficulties in enhancing our customer support resources to adequately service our existing customers and the customers of
acquired businesses;
•the potential loss of key employees or customers of the acquired businesses;
•unanticipated liabilities or contingencies of acquired businesses;
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