FairPoint Communications 2005 Annual Report Download - page 25

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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 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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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.
Proprietary technology of certain suppliers is an integral component of our network and, accordingly, 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 32 rural telephone businesses and we continue to own and operate
28 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;
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