FairPoint Communications 2009 Annual Report Download - page 26

Table of Contents
(IP/MPLS) network that is fully fiber optic based. We believe that this network architecture will enable us to efficiently respond to these technological
changes.
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We face intense competition from a variety of sources for our local calling, long distance and Internet services in a majority of the areas we now
serve, and expect that such competition will continue to intensify in the future. Regulations and technology 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 particular, the
1996 Act and other actions taken by the FCC and state regulatory authorities have promoted competition in the provision of communications services.
In addition, many of our competitors have access to a larger workforce and have substantially greater name-brand recognition and financial,
technological and other resources than we do. Although many of the competitive challenges now confronting larger regulated telephone companies are
limited in the rural areas we serve, these challenges are more prevalent in the small urban areas we serve.
Wireless Competitors
In most of our service areas, we face competition from wireless carriers for both local calling and long distance services. As technology and
economies of scale improve, competition from wireless carriers is expected to continue to increase. In addition, the FCC's requirement that telephone
companies offer wireline-to-wireless number portability has increased the competition we face from wireless carriers. Our Northern New England
operations service areas represent both rural and small urban markets and tend to have better wireless coverage compared to Legacy FairPoint's
predominantly rural service areas. Wireless competition is more robust in these service areas. However, if and to the extent wireless service improves in
the areas we serve, and specifically in the Legacy FairPoint service areas, we expect to face further competition from wireless providers.
Wireline and Cable Competitors
We also face competition from wireline and cable competitors, such as competitive LECs and cable television providers. Competitive LECs either
maintain their own facilities or lease services at wholesale rates.
Competitive LECs not only provide competition for our local calling and long distance services, but most also provide Internet services at
competitive speeds and prices. In addition, competitive LECs are capable of offering video services in competition with us and we expect that they will
increasingly do so in the future.
Cable television companies have aggressively entered the communications market by upgrading their networks with fiber optics and installing
facilities to provide voice, video and Internet services. Cable high-speed Internet services are generally competitive with our Internet services in both
pricing and the speed of such services. We estimate that as of December 31, 2009, a majority of the customers that we serve had access to local calling,
long distance and Internet services through a cable television company.
The FCC's requirement that telephone companies offer wireline-to-wireline number portability has increased the competition we face from both
competitive LECs and cable television providers. In addition, competitive LECs and cable television companies have the ability to bundle voice, high-
speed Internet and video services to their customers, which has and will likely continue to intensify the competition we face from these providers.
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