FairPoint Communications 2005 Annual Report Download - page 6

by actively participating in the communities we serve and by offering an array of communications services and quality customer care.
· We believe that our acquisition strategy has been successful because of our ability to integrate acquisitions and
improve operating efficiencies in the businesses we acquire. Our management team has consistently produced strong operating cash flow
improvements in our acquired businesses. We will continue to evaluate and pursue acquisitions which provide the opportunity to enhance our revenues
and cash flows.
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We offer a broad portfolio of high-quality communications services for residential and business customers in each of the markets in which we operate.
We have a long history of operating in our markets and have a recognized identity within each of our service areas. Our companies are locally staffed, which
enables us to efficiently and reliably provide an array of communications services to meet our customer needs. These include services traditionally associated
with local telephone companies, as well as other services such as long distance, Internet and broadband enabled services. Based on our understanding of our
local customers’ needs, we have attempted to be proactive by offering bundled services designed to simplify the customer’s purchasing and management
process.
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We primarily generate revenue through: (i) the provision of our basic local telephone service to customers within our service areas; (ii) the provision of
network access to interexchange carriers for origination and termination of interstate and intrastate long distance phone calls; (iii) Universal Service Fund high
cost loop payments; and (iv) the provision of other services such as long distance resale, data and Internet and broadband enabled services, enhanced
services, such as caller name and number identification, and billing and collection for interexchange carriers.
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information regarding our revenue
sources.
Local Calling Services
Local calling service enables the local customer to originate and receive an unlimited number of calls within a defined “exchange” area. Local calling
services include basic local lines, private lines and switched data services. We provide local calling services to residential and business customers, generally
for a fixed monthly charge and service charges for special calling features. In a rural local exchange carriers’ territory, the amount that we can charge a
customer for local service is determined by rate proceedings involving the appropriate state regulatory authorities.
Network Access Charges
Network access enables long distance companies to utilize our local network to originate or terminate intrastate and interstate calls. Network access
charges relate to long distance, or toll calls, that typically involve more than one company in the provision of telephone service. Since toll calls are generally
billed to the customer originating the call, a mechanism is required to compensate each company providing services relating to the call. This mechanism is the
access charge and we bill access charges to long distance companies and other customers for the use of our facilities to access the customer, as described
below.
 We generate intrastate access revenue when an intrastate long distance call involving an interexchange carrier is originated
by a customer in one of our rural local exchanges to a customer in another exchange in the same state, or when such a call is terminated to a customer in one of
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