FairPoint Communications 2007 Annual Report Download - page 53
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Table of Contents
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, or USF, 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 USF 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 USF would increase. 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 USF have declined and will likely continue to 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 FCC. These revenues also include USF
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, Carrier Services provides communications providers not affiliated with us with wholesale long distance services.
• We receive revenues from monthly recurring charges for services, including HSD, special access,
private lines, Internet and other services.
• We receive revenues from other services, including video services (including cable television and video-over —
DSL), billing and collection, directory services and sale and maintenance of customer premise equipment.
Following the merger, we expect to be less dependent on certain regulated revenues, including USF payments and access charges.
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