FairPoint Communications 2006 Annual Report Download - page 8

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 Universal Service Fund 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 Universal Service
Fund would increase.
Long Distance Services
We offer switched and dedicated long distance services throughout our service areas through resale agreements with national interexchange carriers. In
addition, through our wholly-owned subsidiary FairPoint Carrier Services, Inc., or Carrier Services, we offer wholesale long distance services to
communications providers that are not affiliated with us.
Data and Internet Services
We offer Internet access via DSL technology, dedicated T-1 connections, Internet dial-up, high speed cable modem and wireless broadband. Customers
can utilize this access in combination with customer owned equipment and software to establish a presence on the web. In addition, we offer enhanced Internet
services, which include obtaining Internet protocol addresses, basic web site design and hosting, domain name services, content feeds and web-based e-mail
services. Our services include access to 24-hour, 7-day a week customer support.
Other Services
We seek to capitalize on our local exchange carriers’ local presence and network infrastructure by offering enhanced services to customers, as well as
billing and collection services for interexchange carriers.
 In certain of our markets we offer video services to our customers through cable television and video-over-DSL.
 Our advanced digital switch and voicemail platforms allow us to offer enhanced services such as call waiting, call forwarding and
transferring, three-way calling, automatic callback, call hold, caller name and number identification, voice mail, teleconferencing, video conferencing, store-
and-forward fax, follow-me numbers, Centrex services and direct inward dial.
 Many interexchange carriers provide long distance services to our local exchange carrier customers and may elect to use our
billing and collection services. Our local exchange carriers charge interexchange carriers a billing and collection fee for each call record generated by the
interexchange carrier’s customer.
 Through our local telephone companies, we publish telephone directories in the majority of our locations. These directories provide
white page listings, yellow page listings and community information listings. These directories generate revenues and operating cash flow from the sale of
yellow page and related advertising to businesses. We contract with leading industry providers to assist in the sale of advertising and the compilation of
information, as well as the production, publication and distribution of these directories.

Most of our 31 local exchange companies operate as the incumbent local exchange carrier in each of their respective markets. Our local exchange
companies serve an average of approximately 13 access lines per square mile versus the non-rural carrier average of approximately 128 access lines per square
mile. Approximately 77% of our access lines serve residential customers. Our business customers account for approximately 23% of our access lines. Our
business customers are predominantly in the agriculture, light manufacturing and service industries.
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