FairPoint Communications 2006 Annual Report Download - page 26

leading up to the Merger, or if any significant business activities are interrupted as a result of the integration process, our business could suffer.
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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 most of our rural markets, we face competition
from wireless technology, which may increase as wireless technology improves. We also face competition from wireline and cable television operators. We may
face additional competition from new market entrants, such as providers of wireless broadband, VoIP, satellite communications and electric utilities. The
Internet services market is also highly competitive, and we expect that competition will intensify. Many of our competitors have brand recognition, offer online
content services and have 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 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. Our ability to respond to new technological developments may be diminished or our response
thereto delayed while our management devotes significant effort and resources to closing the Merger and preparing to integrate our business and Spinco’s
business. 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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